ANNUAL MEETING INFORMATION
QUESTIONS AND ANSWERS
Why am I receiving this Proxy Statement?General Information
This Proxy Statement contains information related to the solicitation of proxies for use at our Special Meeting, to be held at 8:30 a.m., local time, on January 5, 2010 at the Agilysys headquarters at 28925 Fountain Parkway, Solon, Ohio 44139, for the purposes stated in the Notice of Special Meeting of Shareholders. This solicitation is made by Agilysys on behalf of our Board of Directors. “We,” “our,” “us” and “Agilysys” refer to Agilysys, Inc. and its subsidiaries. This Proxy Statement and the enclosed proxy card are being provided in connection with the solicitation by the board of directors of Agilysys, Inc., an Ohio Corporation ("Agilysys," the "Company," "we," "our," or "us"), to be used at the Annual Meeting of Shareholders to be held on September 15, 2016, and any adjournments or postponements of the Annual Meeting. The Annual Meeting will be held at [8:00 a.m.], local time, at the Company's offices at 3380 146th Place SE, Suite 400, Bellevue, Washington 98007. Our principal executive office is located at 425 Walnut Street, Suite 1800, Cincinnati, Ohio 45202. The purposes of the Annual Meeting are stated in the accompanying Notice. This Proxy Statement, the enclosed proxy card, and our Annual Report on Form 10-K for the fiscal year ended March 31, 2016 ("2016 Annual Report"), are first being mailed to shareholders and made available electronically on our website atwww.agilysys.comto shareholders beginning on or about December 7, 2009.[], 2016.
Record Date, Voting Shares, and Quorum
Why is Agilysys holding this Special Meeting?
To vote on whether shareholders approve of MAK Capital’s proposed Control Share Acquisition. Under Ohio law, shareholder authorization must be obtained before MAK Capital may acquire Common Shares that would entitle MAK Capital to directly or indirectly control one-fifth or more but less than one-third of the voting power of Agilysys in the election of its directors. You are also being asked to approve the adjournment of the Special Meeting if deemed desirable by us in our sole discretion.
Who is entitled to vote at the Special Meeting?
Only holdersShareholders of record of our Common Sharescommon shares at the close of business on November 24, 2009,July 28, 2016, the record date for the Special Meeting,"Record Date," are entitled to receive notice of and to vote their shares at the SpecialAnnual Meeting, or any adjournment or postponement of the SpecialAnnual Meeting. Our Common Shares areOn the only class of securitiesRecord Date, there were [22,942,231] common shares outstanding and entitled to vote at the SpecialAnnual Meeting.
What are the voting rights of shareholders?
Each Common Share outstanding on the record date entitles its holdershare is entitled to cast one vote on each matter voted upon.
Who can attend the Special Meeting?
All holders of our Common Shares at the close of business on November 24, 2009, the record date for the Special Meeting, or their duly appointed proxies, are authorized to attend the Special Meeting. Cameras, recording devices, and other electronic devices will not be permitted at the Special Meeting. If you hold your shares in “street name” (that is, through a bank, broker or other nominee), you will need to bring a copy of the brokerage statement reflecting your stock ownership as of November 24, 2009, or a legal proxy from your bank or broker.
What will constitute a quorum at the Special Meeting?
vote. The presence at the SpecialAnnual Meeting, in person or by proxy, of the holders of a majority of the Common Sharescommon shares outstanding at the close of business on November 24, 2009the Record Date will constitute a quorum permittingfor the shareholders to conducttransaction of business at the SpecialAnnual Meeting. We will include abstentions and broker non-votes in the number of Common Sharescommon shares present at the SpecialAnnual Meeting for purposes of determining a quorum. A broker non-vote occurs when a bank, broker, or other nominee holding shares for a beneficial owner has not received instructions from the beneficial owner and does not have discretionary authority to vote the shares. Our common shares are listed on the NASDAQ Global Select Market under the symbol "AGYS." References within this Proxy Statement to our common shares or shares refer to our common shares, without par value, the only class of securities entitled to vote at the Annual Meeting.
AsHow to Vote
If you are the record holder of common shares, you or your duly authorized agent may vote by completing and returning the enclosed proxy card in the envelope provided. This year, you may also vote by telephone or Internet. Telephone and Internet voting information is provided on your proxy card. A control number, located on the proxy card, is designed to verify your identity, allow you to vote your shares, and confirm that your voting instructions have been properly recorded. Please note the deadlines for voting by telephone, the Internet, and proxy card as set forth on the proxy card. If you vote by telephone or Internet, you need not return your proxy card. You may also attend the Annual Meeting and vote in person; however, we encourage you to vote your shares in advance of the record date, there were [23,031,119] Common Shares outstanding.
How do I vote my Common Shares that are held by my bank or broker?
Annual Meeting even if you plan on attending. If your Common Sharescommon shares are held by a bank or broker, or any other nominee, you shouldmust follow the voting instructions provided to you by the bank, broker, or broker.nominee. Although most banks and brokers offer voting by mail, telephone, and on the Internet, availability and specific procedures will depend on their voting arrangements.
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How do I vote?
You or your duly authorized agent may voteUnless revoked, common shares represented by completing and returning the accompanying proxy card, or you may attend the Special Meeting and vote in person.
May I change my vote after I return my proxy card?
Yes. You may revoke a previously granted proxy at any time before it is exercised by submitting to our Secretary at 28925 Fountain Parkway, Solon, Ohio 44139 a notice of revocation or a duly executed proxy bearing a later date, or by attending the Special Meeting and voting in person.
How are votes counted?
If the accompanying proxy card is properly signed and returned to us, and not revoked, it will be votedAS DIRECTED BY YOU. If you return a proxy card but do not indicate how your shares are to be voted, your proxy card(or other valid form of proxy), or as instructed via telephone or Internet, received in time for voting will be voted asABSTAININGfrom the vote on the Control Share Acquisition,FORthe adjournment proposal, instructed. If your proxy card is signed and as recommended by our Board of Directorsreturned with regard to any other matters that properly come before the Special Meeting, or, if no such recommendation isinstructions given, the persons designated as proxy holders on the proxy card will vote as follows:
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| · | FOR the amendment to the Company's Regulations to declassify the board of directors (proposal 1); |
| · | FOR the election of each director nominee named herein (proposal 2); |
| · | FOR the approval of the 2016 Stock Incentive Plan (proposal 3); |
| · | FOR the approval, on a non-binding advisory basis, of the compensation of our named executive officers (proposal 4); and |
| · | FOR the ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm (proposal 5). |
The Company knows of no other matters scheduled to come before the Annual Meeting. If any other business is properly brought before the Annual Meeting, your proxy gives discretionary authority to the proxy holders with respect to such business, and the proxy holders intend to vote the proxy as recommended by our board of directors with regard to any such business, or, if no such recommendation is given, the proxy holders will vote in their own discretion.
How doesRevocability of Proxies
You may revoke or change your vote at any time before the Board recommend that shareholdersfinal vote on the proposed Control Share Acquisition?matter is taken at the Annual Meeting by submitting to our Secretary a notice of revocation or by timely delivery of a valid, later-dated, duly executed proxy by mail, telephone, or Internet. You may also revoke or change your vote by attending the Annual Meeting and voting in person. If your shares are held by a bank, broker, or other nominee, you must contact the bank, broker, or nominee and follow their instructions for revoking or changing your vote.
After careful consideration, includingVote Required, Abstentions, and Broker Non-Votes
If a thorough reviewquorum is present at the Annual Meeting, the affirmative vote of two-thirds of the proposed Control Share Acquisition with Agilysys’ financial and legal advisors, and consultation with Agilysys’ management,voting power of the Board has determinedCompany's outstanding common stock will be required to express no opinion and remain neutral with respectapprove proposal 1, the amendment to the Control Share Acquisition. The events preceding this determination are described below underRegulations to declassify our board of directors. Abstentions and broker non-votes will have the section titled “Background,” andsame effect as votes against the factors considered by the Board in reaching this determination are described below under the section titled “Recommendation by the Board of Directors.”
Since the Board has determined to remain neutral regarding the proposed Control Share Acquisition, why is Agilysys soliciting proxies from shareholders?
Although our Board has determined to remain neutral, the Board desires to provide shareholders with information concerning the Board’s process in reviewing the proposed Control Share Acquisition. The Board also believes that it is important that shareholders be assured that the voting process for the Special Meetingproposal, although they will be handled fairly and properly. MAK Capital has stated that it may raise an adjournment proposal at the Special Meeting. We believe that the adjournment proposal is most likely to be raised if MAK Capital does not have sufficient votes to approve the Control Share Acquisition. Agilysys believes that the vote on a possible adjournment should serve the interests of the shareholders as a whole. Accordingly, Agilysys is providing the WHITE proxy card with this Proxy Statement so that shareholders may provide Agilysys the ability to vote on any adjournment proposal if deemed desirable by Agilysys. The proxy committee will vote, as directed by you, completed, signed and returned WHITE proxy cards that are not subsequently revoked.
Why am I also receiving a proxy statement and proxy card from MAK Capital?
MAK Capital is permitted to solicit proxies for approval of the Control Share Acquisition, and MAK Capital’s proxy statement is accompanied by a BLUE proxy card. MAK Capital is asking shareholders to vote “for” the Control Share Acquisition. Voting on MAK Capital’s BLUE proxy card also provides MAK Capital with sole authority to vote on any adjournment proposal. Voting on the WHITE proxy card gives Agilysys discretion to consider the best interests of the shareholders as a whole in considering any adjournment proposal. Please return only the WHITE proxy card. If both the WHITE and BLUE proxy cards are received from you, the latest dated proxy card will be the proxy card used for vote tabulation.
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Why is MAK Capital seeking approval for the Control Share Acquisition?
MAK Capital desires to own a greater percent of the Common Shares than it currently owns, and Ohio law requires shareholders to approve MAK Capital’s acquisition of the Additional Shares. Approval of the Control Share Acquisition will permit MAK Capital to purchase Common Shares in the open market, in one or more block trades, through an intermediary, pursuant to a tender offer or by any other legally permitted method.
Why is Agilysys responsible for obtaining shareholder approval so that MAK Capital can acquire more shares?
Ohio law requires Agilysys to call a special meeting of its shareholdersconsidered present for the purpose of votingdetermining a quorum.
If a quorum is present at the Annual Meeting, the nominees named herein for election as directors in proposal 2 will be elected if they receive the greatest number of votes cast at the Annual Meeting present in person or represented by proxy and entitled to vote. Abstentions will have no effect on the proposed Control Share Acquisition.election of directors.
If shareholders approve the Control Share Acquisition, will I be asked to tender my Common Shares to MAK Capital?
The Control Share Acquisition you are votingFor proposal 3 (approval of 2016 Stock Incentive Plan), proposal 4 (advisory vote on named executive officer compensation) and proposal 5 (ratification of independent registered public accounting firm), if a quorum is not a tender offer, and you are not being asked to tender any Common Shares. However, if shareholders approve the Control Share Acquisition, MAK Capital will be permitted to acquire the Additional Shares in the open market, in one or more block trades, through an intermediary, pursuant to a tender offer or by any other legally permitted method.
What if the Control Share Acquisition is not approved?
If the Control Share Acquisition is not approved, MAK Capital will not be allowed to acquire Common Shares equal to or greater than one-fifth of Agilysys’ outstanding Common Shares.
Why does the proxy card for the Special Meeting include a certification that has not been included on prior annual or special meeting proxy cards?
Under the Ohio Control Share Acquisition Statute,present, the affirmative vote of the holders of shares representing a majority of the voting powercommon shares present in person or represented by proxy and entitled to vote will be required to approve each proposal. The effect of an abstention is the same as a vote against each proposal. If you hold your shares in street name and do not give your broker or nominee instruction as to how to vote your shares with respect to proposals 1, 2, 3 and 4, your broker or nominee will not have discretionary authority to vote your shares on proposals 1, 2, 3 and 4. These broker non-votes will have no effect on proposals 2, 3 and 4, but will have the same effect as votes against the proposal on proposal 1.
Cumulative Voting
Each shareholder has the right to vote cumulatively in the election of Agilysys directors representedif the shareholder gives written notice not less than 48 hours before the Annual Meeting commences to our Chief Executive Officer or Secretary that he, she, or it wants its voting for the election of directors to be cumulative. In such event, the shareholder giving notice, or a representative of such shareholder, the Chairman, or the Secretary, will make an announcement about such notice at the Special Meeting in personstart of the Annual Meeting. Cumulative voting means that the shareholder may cumulate his, her, or by proxy excluding theits voting power for the election of “Interested Shares,” is required for approvaldirectors by distributing a number of votes, determined by multiplying the number of directors to be elected at the Annual Meeting times the number of such shareholder's shares. The shareholder may distribute all of the Control Share Acquisition. votes to one individual director nominee or distribute the votes among two or more director nominees, as the shareholder chooses. In the event of cumulative voting,
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unless contrary instructions are received, the persons named in the enclosed proxy will vote the shares represented by valid proxies on a cumulative basis for the election of the nominees named herein, allocating the votes among the nominees in accordance with their discretion.
Proxy Solicitation
The certification oncost of solicitation of proxies, including the cost of preparing, assembling, and mailing the Notice, Proxy Statement, and proxy card, will be used for determining which Common Shares are “Interested Shares.”
How do I know if I own “Interested Shares?”
“Interested Shares” are Common Shares heldborne by MAK Capital and its affiliates, by any officer of Agilysys elected or appointed by the Board of Directors, or by any employee of Agilysys who is a director, and Common Shares acquired by any person between the date of the public disclosure of the proposed Control Share Acquisition on November 20, 2009 and the Record Date if the aggregate purchase price of such Common Shares paid by such person exceeds $250,000. Additionally, any Common Shares transferred after the Record Date, if accompanied by voting power in the form of a blank proxy, an agreement to vote as instructed by the transferee or otherwise, are also “Interested Shares.”
Why are you including “Interested Shares” in the First Majority Approval vote and not in the Second Majority Approval vote?
The Ohio Control Share Acquisition Statute requires us to conduct the vote in this manner.
Who pays the costs of soliciting proxies?
We will pay the costs of soliciting proxies. We hired Georgeson Inc. to serve as proxy solicitors for us at a cost of $25,000.us. In addition to soliciting proxiessolicitation by mail, our officers, trusteesarrangements may be made with brokerage houses and other custodians, nominees, and fiduciaries to send proxy materials to their principals, and we may reimburse them for their expenses in so doing. Our officers, directors, and employees may, without additional compensation, may solicit proxies personally or by other appropriate means. It is anticipated that banks, brokers, fiduciaries, custodiansmeans request the return of proxies.
Attending the Annual Meeting
All holders of our common shares at the close of business on the Record Date, or their duly appointed proxies, are authorized to attend the Annual Meeting. Cameras, recording devices, and nomineesother electronic devices will forward proxy soliciting materialsnot be permitted at the Annual Meeting. If you hold your common shares through a bank, broker, or other nominee, you will need to their principals, and that we will reimburse such persons’ out-of-pocket expenses.
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How can I determine the resultsbring a copy of the voting atbrokerage statement reflecting your share ownership as of the Special Meeting?Record Date, or a legal proxy from your bank or broker, to attend the meeting.
Voting Results
Preliminary voting results will be announced at the SpecialAnnual Meeting. Within four business days following the Annual Meeting, final results, or preliminary results if available. Finalfinal results are unknown, will be published in our quarterly reportannounced on a Form 10-Q for the third quarter of fiscal 2010.
Why do the proxy materials contain information regarding the Internet availability of proxy materials?
Pursuant to rules adopted by8-K filed with the Securities and Exchange Commission (“SEC”("SEC"), we. If preliminary results are announced, final results will provide access tobe announced on a Form 8-K filed with the SEC within four business days after the final results are known.
Company Information
Our 2016 Annual Report is being mailed with this Proxy Statement. These documents also are available electronically on our proxy materials on the Internet. As described above, proxy materials for the Special Meeting, includingwebsite at www.agilysys.com, under Investor Relations. Our 2016 Annual Report is not incorporated into this Proxy Statement are now available on the Internet by accessingwww.agilysys.com. Whileand is not to be considered proxy solicitation material. If you wish to have additional copies of our 2016 Annual Report, we will mail copies to you without charge. Requests may be sent to our corporate services office at: Agilysys, elected to mail complete sets of the proxy materials for this Special Meeting, in the future,Inc., Attn: Investor Relations, 1000 Windward Concourse, Suite 250, Alpharetta, Georgia 30005, or you may receive only a Notice of Internet Availability of Proxy Materials,request copies through our website, under Investor Relations. These documents have been filed with SEC and you would then have to request to receive a printed set ofalso may be accessed from the proxy materials.
SEC's website at Who should I contact if I have any questions?www.sec.gov.
If you have any questions about the SpecialAnnual Meeting theor these proxy materials, or your ownership of our Common Shares, please contact Georgeson Inc.Investor Relations by telephone at 770-810-7948, or by email at (800) 336-5134.investorrelations@agilysys.com Banks, or through our website, under Investor Relations.
CORPORATE GOVERNANCE
Corporate Governance Guidelines
The Corporate Governance Guidelines (the "Guidelines") adopted by our board of directors are intended to provide a sound framework to assist the board of directors in fulfilling its responsibilities to shareholders. Under the Guidelines, the board of directors exercises its role in overseeing the Company by electing qualified and brokers may call collect at (212) 440-9800.
VOTING AT THE SPECIAL MEETINGcompetent officers and by monitoring the performance of the Company. The Guidelines state that the board of directors and its committees exercise oversight of executive officer compensation and director compensation, succession planning, director nominations, corporate governance, financial accounting and reporting, internal controls, strategic and operational issues, and compliance with laws and regulations. The Guidelines also state the board of directors' policy regarding eligibility for the board of directors, including director independence and qualifications for director candidates, events that require resignation from the board of directors, service on other public company boards of directors, and stock ownership guidelines. The Nominating and Corporate Governance Committee annually reviews the Guidelines and makes recommendations for changes to the board of directors.
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The Guidelines are available on our website at www.agilysys.com, under Investor Relations.
Code of Business Conduct
The Code of Business Conduct adopted by our board of directors applies to all directors, officers, and employees of the Company and incorporates additional ethics standards applicable to our Chief Executive Officer, Chief Financial Officer, and other senior financial officers of the Company, and any person performing a similar function. The Code of Business Conduct is reviewed annually by the Audit Committee, and recommendations for change are submitted to the board of directors for approval. The Code of Business Conduct is available on our website at www.agilysys.com, under Investor Relations. The Company has in place a hotline available for use by all employees, as described in the Code of Business Conduct. Any Common Shares subjectemployee can anonymously report potential violations of the Code of Business Conduct through the hotline, which is managed by an independent third party. Reported violations are promptly reported to proxiesand investigated by the Company. Reported violations are addressed by the Company and, if related to accounting, internal accounting controls, or auditing matters, the Audit Committee. In addition, we intend to post on our website all disclosures that are returned without a certification specifying that such Common Shares are not “Interested Shares” will be presumedrequired by law or NASDAQ listing standards concerning any amendments to, be “Interested Shares.” See “Certain Voting Procedures at the Special Meeting.”
At the Special Meeting, Agilysys shareholders will be asked to approve a resolution authorizing the Control Share Acquisition. Authorization for the Control Share Acquisition requires:
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| • | the affirmative vote of the holders of a majority of the voting power entitled to vote in the election of Agilysys directors represented at the Special Meeting in person or by proxy (the “First Majority Approval”); and |
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| • | the affirmative vote of the holders of a majority of the voting power entitled to vote in the election of Agilysys directors, excluding the voting power of “Interested Shares,” as defined in the section entitled “Ohio Control Share Acquisition Statute,” represented at the Special Meeting in person or by proxy (the “Second Majority Approval”). |
The Board has authorized, and Agilysys will institute, presumptions and procedures to implement the legislative mandate to exclude the voting power of Interested Shares, including a requirement that each shareholder certify the number of such shareholder’s Common Shares being voted that are eligible to vote in respector waivers from, any provision of the Second Majority Approval. These presumptions and procedures are set forth in Exhibit B to this Proxy Statement. In the eventCode of Business Conduct.
Director Independence
NASDAQ listing standards provide that some but not all of such shareholder’s Common Shares are Interested Shares, the shareholder should indicate the number of such shareholder’s Common Shares being voted that are not Interested Shares and are therefore eligible to vote in respect of the Second Majority Approval.
It is Agilysys’ position that all Common Shares that are voted without a certification, including on a proxy card provided by MAK Capital, will be presumed to be Interested Shares and therefore ineligible to vote in respect of the Second Majority Approval.
If the Control Share Acquisition is not authorized by both of the majority votes required, MAK Capital may not proceed further with the Control Share Acquisition. If both the required majorities authorize the Control Share Acquisition, MAK Capital would be permitted by the Ohio Control Share Acquisition Statute to acquire the Additional Shares. Notwithstanding shareholder approval of the Control Share Acquisition, MAK Capital would
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continue to be prohibited from engaging in certain transactions with Agilysys under Chapter 1704 of the Ohio Revised Code because MAK Capital already owns more than 10% of the outstanding Common Shares.
A quorum will be deemed present at the Special Meeting if at least a majority of the voting power entitledmembers of the board of directors must be independent, meaning free of any material relationship with the Company, other than his relationship as a director. The Guidelines state that the board of directors should consist of a substantial majority of independent directors. A director is not independent if he fails to votesatisfy the standards for director independence under NASDAQ listing standards, the rules of the SEC, and any other applicable laws, rules, and regulations. During the board of directors' annual review of director independence, the board of directors considers transactions, relationships, and arrangements, if any, between each director or a director's immediate family members and the Company or its management. In June 2016, the board of directors performed its annual director independence review and as a result of such review determined that each of Donald Colvin, Jerry Jones, Michael A. Kaufman, Melvin Keating, Keith M. Kolerus, and John Mutch qualify as independent directors. Mr. Dennedy is not independent because of his service as President and CEO of the Company.
Director Attendance
The board of directors held six meetings during fiscal year 2016, and no director attended less than 75% of the aggregate of the total number of board of director meetings and meetings held by committees of the board of directors on which he served. Independent directors meet regularly in executive session at board of director and committee meetings, and executive sessions are chaired by the Special Meeting is represented atchairman of the Special Meeting in personboard or by proxy. The holdersthe appropriate committee chairman. It is the board of a majoritydirectors' policy that all of the voting power represented at the Special Meeting in person or by proxy, whether or not a quorum is present, may adjourn the Special Meeting from time to time, but not to a date later than January 9, 2010. Pursuant to the Ohio Control Share Acquisition Statute, unless MAK Capital and Agilysys agree in writing to another date, the Special Meeting shall be held within 50 days after receipt by Agilysys of the Acquiring Person Statement. Since the Acquiring Person Statement was received by Agilysys on November 20, 2009, the Special Meeting must be held no later than January 9, 2010. Agilysys currently has no plans to request that MAK Capital agree to postpone or adjourn the Special Meeting, and Agilysys has not received any request from MAK Capital to postpone or adjourn the Special Meeting past January 9, 2010. In the event that the Special Meeting is not held because of the absence of a quorum, the Control Share Acquisition would not be authorized.
You are also being asked to approve the adjournment of the Special Meeting if deemed desirable by Agilysys in its own discretion. Authorization of the proposal to adjourn the Special Meeting if deemed desirable by Agilysys requires the affirmative vote of the holders of a majority of the outstanding Common Shares entitled to vote at the Special Meeting represented in person or by proxy.
As of the Record Date, there were [23,031,119] Common Shares issued and outstanding. Each Common Share entitles the holder thereof to one vote on the proposal to authorize the Control Share Acquisition (provided that, as described herein, Interested Shares will be excluded for purposes of determining the Second Majority Approval) and one vote on the adjournment proposal.
Whether or not you plan tomembers attend the SpecialAnnual Meeting of Shareholders absent exceptional cause. Messrs. Colvin, Dennedy and Keating attended the Board urges you2015 Annual Meeting.
Shareholder Communication with Directors
Shareholders and others who wish to vote your Common Shares oncommunicate with the accompanying WHITE proxy card, complete the accompanying certification and return it in the enclosed postage-paid envelope. The Board is expressing no opinion and is remaining neutral on the Control Share Acquisition proposal, but recommends you voteFORthe adjournment proposal on the accompanying WHITE proxy card. Youboard of directors as a whole, or with any individual director, may revoke your proxy at any time before it is voted at the Special Meetingdo so by deliveringsending a written noticecommunication to such director(s) in care of revocation or a later dated proxy for the Special Meeting to our Secretary at our Alpharetta, Georgia office address, and our Secretary will forward the Agilysys headquarters at 28925 Fountain Parkway, Solon, Ohio 44139.
Proxies for the Special Meeting may also be revoked by voting in person at the Special Meeting, although attendance at the Special Meeting will not by itself revoke a proxy. Unless revoked in the manner set forth above, proxies received by Agilysys on the accompanying form will be voted at the Special Meeting only in accordance with the written instructions set forth on the WHITE proxy card. In the absence of written instructions, proxies in the form accompanying this Proxy Statement will be voted asABSTAININGfrom voting on the Control Share Acquisition andFORthe adjournment proposal. If you return both the WHITE and the BLUE proxy cards, the later dated proxy card will be counted for vote tabulation.
Any abstention from voting on a proxy that has not been revoked will be included in computing the number of Common Shares present for purposes of determining whether a quorum is present at the Special Meeting and will have the same effect as a vote “AGAINST” the proposals. When brokers do not receive voting instructions from a customer, they are permitted to, and generally do, exercise discretionary voting authority with respectcommunication to the customer’s shares on “routine” matters being voted on at a meeting. If there are non-routine matters also being voted upon at the same meeting, the broker is not permitted to exercise discretionary voting authority on such matters, and the shares voted by the broker in its discretion on routine matters are considered broker non-votes with respect to the non-routine matters. The Control Share Acquisition proposal is a non-routine matter, and brokers may not exercise discretionary voting authority. The adjournment proposal is considered a routine matter. If there are any broker non-votes, such broker non-votes will be included in the quorum and have the same effect as a vote “AGAINST” the Control Share Acquisition proposal.
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specified director(s).
COMMON SHARES OUTSTANDING AND ELIGIBLE TO BE VOTED IN FIRST MAJORITY APPROVAL AND SECOND MAJORITY APPROVAL
Common Shares are the only shares entitled to be voted at the Special Meeting. Common Shares are entitled to one vote per share and vote together as a single class. As of the Record Date, there were [23,031,119] Common Shares issued and outstanding, all of which are eligible to be voted in determining whether the Control Share Acquisition will be approved by the First Majority Approval required under the Ohio Control Share Acquisition Statute.
The number of Common Shares eligible to be voted in determining whether the Control Share Acquisition has been approved by the Second Majority Approval under the Ohio Control Share Acquisition Statute, consisting of the voting power of all the outstanding Common Shares excluding the voting power of Interested Shares, will be determined as of the time of the Special Meeting in the manner described in this Proxy Statement. The categories of Interested Shares that will not be eligible to be voted in determining the Second Majority Approval are as follows:
1. Common Shares owned by MAK Capital and its affiliates, as described below under the section titled “Background.” Based on MAK Capital’s Schedule 13D filed with the SEC, subsequent Section 16 reports, and the Acquiring Person Statement, MAK Capital beneficially owns 4,418,447 Common Shares, which as of the Record Date represented 19.18% of the outstanding Common Shares. For purposes of the Second Majority Approval, such Common Shares are Interested Shares that are not eligible to be voted in determining the Second Majority Approval.
2. Common Shares owned by officers of Agilysys elected or appointed by the Board or owned by any employee of Agilysys who is also a director of Agilysys. As of the Record Date, these individuals own, in the aggregate, 357,962 Common Shares, which are, for this purpose, Interested Shares and are not eligible to be voted in determining the Second Majority Approval.
3. Common Shares acquired by any person for valuable consideration during the period beginning November 20, 2009, the date of the first public disclosure of MAK Capital’s proposed Control Share Acquisition, and ending on the Record Date (such period being referred to herein as the “Restricted Period”), if the aggregate consideration paid by such person for such Common Shares exceeds $250,000.
4. Common Shares owned by any person that transfers such Common Shares for valuable consideration after the Record Date, if the Common Shares are accompanied by the voting power of such transferred Common Shares in the form of a blank proxy, an agreement to vote as instructed by the transferee, or otherwise.
For purposes of the foregoing, the term “owned” means Common Shares as to which a person may exercise or direct the exercise of the voting power entitled to vote in the election of directors. Shareholders who acquire, prior to the commencement of the Restricted Period, Common Shares that are not Interested Shares and who acquire additional Common Shares during the Restricted Period for an aggregate consideration in excess of $250,000 will be entitled to have their Common Shares acquired prior to the Restricted Period voted in determining whether the Second Majority Approval has been obtained if they provide an appropriate certification of eligibility, as described below under the section titled “Certification of Interested Shares.”
All Common Shares acquired during the Restricted Period for an aggregate purchase price of more than $250,000 will be considered Interested Shares, including the first $250,000 of such Common Shares. Furthermore, Common Shares that are considered Interested Shares because they were purchased during the Restricted Period as part of an aggregate purchase of $250,000 or more of Common Shares will remain Interested Shares if owned by such purchaser as of the Record Date even if the purchaser of such Common Shares at some point during that period disposes of some of such Common Shares. For example, in the case of a person who buys $1,000,000 worth of Common Shares during the Restricted Period, then sells $800,000 worth of Common Shares during that period, all of such person’s Common Shares acquired during the Restricted Period and still owned as of the Record Date are Interested Shares.
The Ohio Control Share Acquisition Statute requires that Common Shares acquired by persons acting in concert be aggregated for the purpose of calculating the $250,000 threshold for determination of Interested Share status. In the event that Common Shares are entitled to be voted by more than one person, all of such Common
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Shares will be considered to be owned by each such person for purposes of determining whether such Common Shares are Interested Shares.
Each investment advisor or other person who holds Common Shares for different beneficial owners, based on its own circumstances and arrangements with its clients, will need to make its own determination as to whether any of the Common Shares held in its accounts for the benefit of such beneficial owners are Interested Shares.
Under the Ohio Control Share Acquisition Statute, Common Shares owned by directors who are not employees of Agilysys, and who do not fall into any other category described in subparagraph (1), (2), (3) or (4) above, would not be Interested Shares. Agilysys’ non-employee directors, excluding R. Andrew Cueva, an affiliate of MAK Capital, owned an aggregate of [254,418] Common Shares as of the Record Date and, to the best of Agilysys’ knowledge, none of these Common Shares are Interested Shares.
All Common Shares as to which a signed certification of eligibility, as described below under the section titled “Certification of Interested Shares,” has been provided on the proxy card or ballot (provided at the Special Meeting for voting in person) indicating that such Common Shares are not Interested Shares will be presumed by Agilysys to be eligible to be voted in determining whether the Control Share Acquisition is approved by the Second Majority Approval. This presumption may be rebutted if a shareholder signing the proxy card or ballot provides subsequent information indicating that some or all of the Common Shares represented by the original proxy card or ballot are, or have become, Interested Shares or a successful challenge is made to such certification on the basis of information available to the challenging party. It is Agilysys’ position that Common Shares subject to a proxy card or ballot without a certification of eligibility completed by the shareholder shall be presumed to be Interested Shares and not eligible to be voted in determining whether the Control Share Acquisition has been approved by the Second Majority Approval.
IT IS ALSO AGILYSYS’ POSITION THAT ALL COMMON SHARES WHICH ARE VOTED ON ANY PROXY CARD THAT MAY BE DISTRIBUTED BY, OR ON BEHALF OF, MAK CAPITAL, WHICH DO NOT CONTAIN A CERTIFICATION OF ELIGIBILITY SIMILAR TO THE ONE AUTHORIZED ON AGILYSYS’ PROXY CARD, SHALL ALSO BE PRESUMED TO BE INTERESTED SHARES, UNLESS THE SHAREHOLDER SIGNING THE PROXY CARD SIGNS AND PRESENTS EITHER (1) A PROXY CARD BEARING A LATER DATE WITH A SIGNED CERTIFICATION OF ELIGIBILITY OR (2) A SEPARATE CERTIFICATION OF ELIGIBILITY IN SUBSTANTIALLY THE FORM PROVIDED TO SHAREHOLDERS BY AGILYSYS.
Corporate Election Services will upon telephone request furnish Agilysys shareholders of record with additional WHITE proxy cards that contain a certification of eligibility or separate certifications of eligibility. Please call toll-free at 1-877-382-0000. Banks and brokers may call Georgeson collect at(212) 440-9800 to receive these materials.
CERTAIN VOTING PROCEDURES AT THE SPECIAL MEETING
The Board has authorized, and Agilysys will institute, presumptions and procedures to govern the conduct of the Special Meeting as well as to implement the Ohio legislative mandate to exclude the voting power of Interested Shares from the determination of the Second Majority Approval. The material presumptions and procedures are described below and are qualified by reference to Exhibit B hereto which sets forth the presumptions and procedures authorized by the Board with respect to the Special Meeting.
The required votes needed to pass the Control Share Acquisition proposal are both the First Majority Approval and the Second Majority Approval. All shareholders will be asked on the proxy card to certify whether or not they hold “Interested Shares,” which are not eligible to be voted in the Second Majority Approval.
As described herein, each shareholder must certify on the WHITE proxy card or a separate certification of eligibility the number of Common Shares being voted that are eligible to vote in respect of the Second Majority Approval. Agilysys shareholders who own both (i) Common Shares that are not Interested Shares and (ii) Common Shares that are Interested Shares because they were acquired for an aggregate purchase price of more than $250,000 during the Restricted Period will be able to certify the number of Common Shares acquired prior to November 20, 2009 and therefore eligible to be voted in the Second Majority Approval. It is presumed that every Common Share that is certified as eligible to vote in the Second Majority Approval is eligible to vote in the Second Majority Approval. It is
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presumed that every Common Share that is not certified as eligible to vote in the Second Majority Approval, or every Common Share as to which there is no certification of eligibility, is not eligible to vote in the Second Majority Approval.
UNDER THE PROCEDURES ADOPTED FOR THE SPECIAL MEETING, ALL COMMON SHARES THAT ARE VOTED WITHOUT SUCH A CERTIFICATION, OR THAT ARE OWNED BY A SHAREHOLDER THAT HOLDS BOTH INTERESTED SHARES AND NON-INTERESTED SHARES BUT FAILS TO INDICATE HOW MANY COMMON SHARES ARE NOT INTERESTED SHARES, SHALL BE PRESUMED TO BE INELIGIBLE TO VOTE IN RESPECT OF THE SECOND MAJORITY APPROVAL.
Banks, brokerage houses, other institutions, nominees, and fiduciaries holding Common Shares beneficially owned by other parties will be requested to include this certification on all materials distributed to such beneficial owners seeking instructions from the beneficial owners as to how to vote such Common Shares.
If you are a bank, broker or other nominee who holds Common Shares for a beneficial owner of the Common Shares, you should look through to the person who has the power “to exercise or direct the exercise of the vote” with respect to Common Shares at the Special Meeting in determining whether any such shares acquired during the Restricted Period are Interested Shares.
The Board has appointed Corporate Election Services as the Inspector of Election. The Board of Directors may, if it deems it appropriate, appoint a presiding inspector to oversee the Inspector of Election. The Inspector of Election will, among other things, determine whether a quorum is present, tabulate votes at the Special Meeting and resolve disputes, including disputes as to whether Common Shares are “Interested Shares.” Agilysys will submit, and MAK Capital may also submit, to the Inspector of Election information that may assist in identifying which Common Shares are Interested Shares for purposes of challenging any certification of eligibility or lack thereof made on a proxy card or ballot (provided at the Special Meeting for voting in person) that Agilysys or MAK Capital, on the basis of such information, may believe to be incorrect or invalid. Under procedures approved by the Board, such challenges are to be made on a timely basis prior to the certification of the vote at the Special Meeting. All such challenges will be resolved by the Inspector of Election. The Inspector of Election will be instructed to conduct its review and tabulation of proxies as expeditiously as possible.
All Common Shares as to which a signed certification of eligibility, as described below under the section titled “Certification of Interested Shares,” has been provided on the proxy card or ballot indicating that such Common Shares are not Interested Shares will be presumed by the Inspector of Election to be eligible to be voted in determining whether the Control Share Acquisition has obtained the Second Majority Approval.
If the Inspector of Election cannot definitively determine whether a quorum is present, the business of the Special Meeting will go forward, even though the final determination as to whether the quorum is present may not be completed for a number of days. If the quorum requirement is not met, the Control Share Acquisition shall not be considered to have been approved. No other business is expected to be conducted at the Special Meeting.
In addition to the presumptions and procedures described above, the following customary presumptions, among others, will be applicable in connection with the Special Meeting:
| | |
| • | proxies regular on their face are valid; |
|
| • | undated but otherwise regular proxies are valid; |
|
| • | ambiguities shall be resolved in favor of enfranchising shareholders and affirming the eligibility of their Common Shares; |
|
| • | signatures are valid, and signatures on behalf of entities or made by mechanical device are authorized; |
|
| • | in the case of shareholders who submit more than one proxy, the most recent one is valid; |
|
| • | a legibly signed proxy is valid, notwithstanding discrepancies or incorrect information; |
|
| • | a proxy is intended to vote all shares of the record owner, unless expressly stated to the contrary; and |
|
| • | nominees will comply with all applicable laws. |
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BACKGROUND
MAK Capital first became a holder of Common Shares in January 2007. MAK Capital currently beneficially owns 19.18% of the Common Shares and is Agilysys’ largest shareholder. Of the Common Shares owned by MAK Capital, approximately 11.49% of the Common Shares are beneficially owned by MAK Capital Fund LP and approximately 7.70% of the Common Shares are beneficially owned by Paloma International L.P. through its subsidiary, Sunrise Partners Limited Partnership, a Delaware limited partnership. R. Andrew Cueva, Managing Director of MAK Capital Fund LP and a director of Agilysys, may be deemed to beneficially own Common Shares beneficially owned by MAK Capital Fund LP. Mr. Cueva disclaims beneficial ownership of the Common Shares held by MAK Capital Fund LP except to the extent of his pecuniary interest in MAK Capital Fund LP’s interest in the Common Shares. Additionally, other affiliated entities of MAK Capital, and affiliates of those entities, may be deemed to beneficially own the Common Shares held by MAK Capital.
Based on a Schedule 13G filing with the SEC on November 19, 2007, MAK Capital and its affiliates first reported beneficial ownership of 1,672,122 Common Shares. MAK Capital and its affiliates increased their ownership stake in Agilysys from February 2008 through July 2008, reporting beneficial ownership of an additional 1,538,813 Common Shares on numerous Form 4 filings made during that period. On July 1, 2008, MAK Capital and its affiliates filed a Schedule 13D, indicating beneficial ownership of 4,047,281 Common Shares. During the period from November 2008 through February 2009, MAK Capital and its affiliates continued to increase their ownership stake in Agilysys, reporting beneficial ownership of an additional 371,166 Common Shares on numerous Form 4 filings made during that period.
On June 25, 2008, Mr. Cueva was appointed to Agilysys’ Board of Directors to serve as a Class B director. Mr. Cueva replaced Curtis J. Crawford as a member of the Board following Mr. Crawford’s resignation. Mr. Cueva was reelected to the Board by Agilysys’ shareholders at the Annual Meeting held in March of 2009, and his current term will expire in 2011. From its inception in May 2008 until it was disbanded in March 2009, Mr. Cueva also served on a special committee of independent directors established by the Board to explore all strategic options to maximize shareholder value, including the sale of all or parts of Agilysys. Mr. Cueva also serves on the Audit and the Nominating and Corporate Governance Committees of the Board.Board
In March 2009, Mr. Cueva discussed withDuring fiscal year 2016, the Board and at a special meetingboard of directors had four standing committees: the Audit Committee, Compensation Committee, Nominating and Corporate Governance Committee, (the “Committee”)and Strategic Review Committee. At the possible interestend of MAK Capital in increasing MAK Capital’s ownershipthe fiscal year and as of Common Shares to a level that would have required MAK Capital to file an acquiring person statement with Agilysys. In April 2009,July 28, 2016, the Committee held a special meeting to considermembers and discuss the issues raised by the potential interestchairman of MAK Capital and received related presentations from management and Agilysys’ financial advisor. No further action was taken by the Board or the Committee,each committee were as no acquiring person statement was filed by MAK Capital at that time.follows:
In October of 2009, Mr. Cueva again discussed with the Board and the Committee the possible interest of MAK Capital in increasing MAK Capital’s ownership of Common Shares to an amount equal to or more than one-fifth, but less than one-third, of the outstanding Common Shares.4
On November 18, 2009, the Committee, including Mr. Cueva, held a special meeting to consider and discuss the issues raised by the potential interest of MAK Capital. All members of the Committee participated in the meeting. Mr. Cueva presented to the Committee information regarding MAK Capital’s proposed Control Share Acquisition, as reflected in a draft acquiring person statement provided to the Committee. Mr. Cueva responded to questions and then recused himself from the balance of the meeting. The remaining Committee members then heard presentations from legal and financial advisors, as well as management, regarding the proposed Control Share Acquisition, discussed at length the information presented, and unanimously determined that the Committee should recommend to the Board that the Board express no opinion and remain neutral with respect to the proposed Control Share Acquisition and that the Board recommend to shareholders that they confer discretionary authority on the proxy committee appointed by the Board to vote FOR the adjournment proposal if the proxy committee deems that advisable based on the circumstances at the time.
On November 20, 2009, MAK Capital delivered to Agilysys its Acquiring Person Statement pursuant to the Ohio Control Share Acquisition Statute. MAK Capital indicated in the Acquiring Person Statement that it intended
10
to acquire a number of Common Shares that, when added to MAK Capital’s current holdings in Common Shares, would increase MAK Capital’s voting power in the election of Agilysys’ directors to equal one-fifth or more, but less than one-third, of the voting power of Common Shares.
On November 20, 2009, the Board held a special meeting to consider and discuss the issues raised by the proposed Control Share Acquisition, the Committee’s recommendation to the Board and the Board’s possible recommendations to shareholders. All members of the Board participated in the meeting. Mr. Cueva made a presentation to the Board regarding the proposed Control Share Acquisition, responded to questions, and then recused himself from the balance of the meeting. The remaining members of the Board then heard additional presentations, as had been presented to the Committee, from legal and financial advisors and management regarding the proposed Control Share Acquisition. After an extensive discussion by the remaining members of the Board regarding the information and issues presented, the Board unanimously determined, with Mr. Cueva recusing himself from the vote, to express no opinion and remain neutral with respect to the Control Share Acquisition and to recommend to shareholders that they confer discretionary authority on the proxy committee appointed by the Board to vote FOR the adjournment proposal if the proxy committee deems that advisable based on the circumstances at the time. The factors considered by the Board in reaching the determination to remain neutral regarding the proposed Control Share Acquisition are described below under the section titled “Recommendation by the Board of Directors.”
Based on MAK Capital’s filings with the SEC, MAK Capital’s holdings of Common Shares exceed 10% of the voting power in the election of directors of Agilysys. On February 5, 2008, MAK Capital filed a Form 3 with the SEC indicating 10% ownership of the Common Shares as of January 31, 2008. Under Chapter 1704 of the Ohio Revised Code, MAK Capital is an “interested shareholder” and, based on that status as an “interested shareholder,” MAK Capital is prohibited from engaging in certain transactions (a “Chapter 1704 transaction”) with Agilysys during the three-year period following the date of acquiring more than 10% of the voting power in the election of directors of Agilysys. Subject to certain exceptions, Chapter 1704 transactions include mergers, dispositions and sales of assets. See Exhibit C of this Proxy Statement for the full text of Chapter 1704 of the Ohio Revised Code.
CHANGE OF CONTROL IMPLICATIONS
Agilysys has entered into a Change of Control Agreement with Martin F. Ellis, Agilysys’ President and Chief Executive Officer. No other executive officer named in the 2009 proxy statement (“Named Executive Officer”) has a change of control agreement. Under Mr. Ellis’ agreement, two events need to occur for change in control payments to be triggered. First, a change of control must occur, and under the agreement a change in control occurs if there is an acquisition by any person, entity or group of the beneficial ownership of 20% or more of either the then outstanding Common Shares or the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors. MAK Capital is the beneficial owner of 19.18% of the Common Shares, and the beneficial ownership of at least one-fifth of the Common Shares by MAK Capital will constitute a change of control under Mr. Ellis’ agreement. Once a change of control has occurred, a change of control payment would be payable to Mr. Ellisonly in the event he is terminated without cause or voluntarily terminates his employment for good reason within 12 months following the change of control, which would be the date that MAK Capital first acquires beneficial ownership of one-fifth of the Common Shares. Under Mr. Ellis’ agreement, ifboth the change of control and such termination occur, Agilysys would pay him an amount equal to 24 times the greater of his (i) highest monthly base salary during the 12 months prior to the change of control or (ii) the highest monthly base salary paid or payable by Agilysys at any time from the90-day period preceding the change of control through his termination date. Mr. Ellis also would receive a lump sum equal to two times his target annual incentive, as well as payments for auto, health and dental care and taxgross-ups. Additionally, Mr. Ellis would be treated as having retired from Agilysys two years following his termination and would receive two additional years of credited service under his Supplemental Executive Retirement Plan (“SERP”).
Additionally, certain equity awards granted under Agilysys’ 2006 Stock Incentive Plan and 2000 Stock Incentive Plan are affected by a change of control. In May of 2009, the Board amended the 2006 Stock Incentive Plan to change the definition of change of control to require a 33-1/3% beneficial ownership of the Common Shares to trigger any change of control benefits. However, awards granted prior to that date are subject to a 20% beneficial ownership level, and beneficial ownership of at least one-fifth of the Common Shares by MAK Capital will
11
constitute a change of control under those award agreements. Once a change of control has occurred, all unvested outstanding options issued prior to May 2009 become immediately exercisable and all unvested restricted shares issued prior to May 2009 become immediately vested.
Messrs. Rhein, Coleman and Sayers, each of whom was a Named Executive Officer, are no longer Agilysys employees and therefore no benefits will accrue to them as a result of the acquisition of the Additional Shares by MAK Capital.
The change of control payments to Mr. Ellis ifboth a change of controland termination without cause or voluntary termination for good reason within 12 months following the change of control occur are set forth below as “Severance – Base & Incentive,” “Supplemental Executive Retirement Plan,” “Auto Allowance” and “Health Insurance.”
The values resulting from the accelerated vesting of stock options and restricted shares for Mr. Ellis and other Named Executive Officers as a result of a change of control are set forth below as “Stock Options – Accelerated Vesting” and “Restricted Stock – Accelerated Vesting.” Please see “Change of Control Implications — Equity Awards” below for the regular vesting dates of the stock options listed in the table below.
| | | | | | | | | | | | | | | | | | | | | |
| | | Ellis | | | Kossin | | | Civils | | | Stehle | | | Stout | |
| |
Accelerated Vesting Triggered by
Change of Control | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Stock Options –
Accelerated Vesting (1) | | $ | 579,000 | | | $ | 164,100 | | | $ | 145,868 | | | $ | 145,868 | | | $ | 145,868 | |
Restricted Stock –
Accelerated Vesting (2) | | $ | 418,367 | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
| | | | | | | | | | | | | | | | | | | | | |
| Total | | $ | 997,367 | | | $ | 164,100 | | | $ | 145,868 | | | $ | 145,868 | | | $ | 145,868 | |
| | | | | | | | | | | | | | | | | | | | | |
Payments Triggered by
Change of Control and Termination | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Severance –
Base & Incentive (3) | | $ | 1,575,000 | | | | | | | | | | | | | | | | | |
Supplemental Executive
Retirement Plan (4) | | $ | 478,505 | | | | | | | | | | | | | | | | | |
| Auto Allowance (5) | | $ | 24,000 | | | | | | | | | | | | | | | | | |
| Health Insurance (6) | | $ | 25,484 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Total | | $ | 2,102,989 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
Total Accelerated Vesting and Payments for Change
of Control and Termination | | $ | 3,100,356 | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | | |
| Director | Audit | Compensation | Nominating and Corporate Governance | |
| Donald Colvin* | Chairman | | | |
| James H. Dennedy | | | | |
(1)Jerry Jones | X | | | Calculated using the closing market price per Common Share of $7.98 on November 13, 2009 less the option price per share for the total number of options accelerated. The accelerated vesting of options includes only the assumed exercise of options with an exercise price less than $7.98 since there would be no proceeds upon the exercise of “underwater” stock options. |
| | X | |
(2)Michael A. Kaufman | | X | Certain outstanding unvested restricted shares held by Mr. Ellis would vest upon the acquisition of one-fifth of Common Shares by MAK Capital prior to March 31, 2010, the original vesting date for these restricted shares. The reported value for the restricted shares is equal to 52,427 underlying Common Shares (including reinvested shares) times the closing market stock price of $7.98 on November 13, 2009.Chairman | Chairman |
| Melvin Keating | | Chairman | X | X |
| Keith M. Kolerus | | X | X | |
(3)John Mutch* | X | X | | | The amount reflects the sum of 24 months of regular base pay and an amount equal to two times the annual incentive plan target applicable to the executive at the time of termination. |
| | | |
(4) | | | Reflects the value which is the difference between SERP benefits which are only paid as a result of change of control and SERP benefits paid upon normal retirement. |
| | | |
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| | | |
(5) | | | Represents the sum of 24 months of car allowance. |
| | | |
(6) | | | Health Insurance consists of health care and dental care benefits. The amount reflects the sum of 24 months of continued health and dental benefits for Mr. Ellis. This benefit has been calculated based on costs for calendar year 2010. |
| | | X |
*Qualifies as an Audit Committee Financial Expert.
Equity Awards
Committee Charters. The board of directors has adopted a charter for each committee other than the Strategic Review Committee, and each committee with a charter is responsible for the annual review of its respective charter. Charters for each committee are available on our website at www.agilysys.com, under Investor Relations.
Audit Committee.The following table details outstandingAudit Committee held nine meetings during fiscal year 2016. The Audit Committee reviews with our independent registered public accounting firm the proposed scope of our annual audits and unvested stock optionsaudit results, as well as interim reviews of quarterly reports; reviews the adequacy of internal financial controls; reviews internal audit functions; is directly responsible for the appointment, determination of compensation, retention, and general oversight of our independent registered public accounting firm; reviews related person transactions; oversees the Company's implementation of its Code of Business Conduct; and reviews any concerns identified by either the internal or external auditors. The board of directors determined that all Audit Committee members are financially literate and independent under NASDAQ listing standards for audit committee members. The board of directors also determined that Messrs. Colvin and Mutch each qualify as an "audit committee financial expert" under SEC rules.
Compensation Committee. The Compensation Committee held five meetings during fiscal year 2016. The purpose of the Compensation Committee is to enhance shareholder value by ensuring that pay available to the board of directors, Chief Executive Officer, and other executive officers enables us to attract and retain high-quality leadership and is consistent with our executive pay philosophy. As part of its responsibility, the Compensation Committee oversees our pay plans and policies; annually reviews and determines all pay, including base salary, annual cash incentive, long-term equity incentive, and retirement and perquisite plans; administers our incentive programs, including establishing performance goals, determining the extent to which performance goals are achieved, and determining awards; administers our equity pay plans, including making grants to our executive officers; and regularly evaluates the effectiveness of the overall executive pay program and evaluates our incentive plans to determine if the plans' measures or goals encourage inappropriate risk-taking by our employees. A more complete description of the Compensation Committee's functions is found in the Compensation Committee Charter. The board of directors determined that all Compensation Committee members are independent under NASDAQ listing standards for compensation committee members.
Our Legal and Human Resources Departments support the Compensation Committee in its work and, in some cases, as a result of delegation of authority by the Compensation Committee, fulfill various functions in administering our pay programs. In addition, the Compensation Committee has the authority to engage the services of outside consultants and advisers to assist it. The Committee engages compensation consultants to perform current market assessments when it believes that such an assessment would inform its decision making with respect executive compensation. The Compensation Committee did not engage a compensation consultant to advise it in connection with setting compensation for the Named Executive Officers in fiscal year 2016.
Our Chief Executive Officer, Chief Financial Officer, and our General Counsel attend Compensation Committee meetings when executive compensation, Company performance, and individual performance are discussed and evaluated by Compensation Committee members, and they provide their thoughts and recommendations on executive pay issues during these meetings and provide updates on financial performance, industry status, and other factors that will become immediately exercisable upon MAK Capital’s acquisitionmay impact executive compensation. Decisions regarding the Chief Executive Officer's compensation were based solely on the Compensation Committee's deliberations, while compensation decisions regarding other executive officers took into consideration recommendations from the Chief Executive Officer. Only Compensation Committee members make decisions on executive officer compensation and approve all outcomes.
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Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee ("Nominating Committee") held four meetings during fiscal year 2016. The board ofone-fifth directors determined that all Nominating Committee members are independent under NASDAQ listing standards. The Nominating Committee assists the board of the Common Shares if such acquisition occurs priordirectors in finding and nominating qualified people for election to the original vesting dateboard; reviewing shareholder-recommended nominees; assessing and evaluating the board of directors' effectiveness; and establishing, implementing, and overseeing our governance programs and policies. The Nominating Committee is responsible for reviewing the qualifications of, and recommending to the board of directors, individuals to be nominated for membership on the board of directors. The board of directors has adopted Guidelines for Qualifications and Nomination of Director Candidates ("Nominating Guidelines"), and the Nominating Committee considers nominees using the criteria set forth in the table below.Nominating Guidelines. At a minimum, a director nominee must:
| | | | | | | | | | | | | | | | | |
| | | Number of
| | Original
| | Option
| | Option
|
| | | Securities Underlying
| | Vesting
| | Exercise
| | Date
|
Name | | Unvested Options (#) | | Date | | Price | | Expiration |
| Martin Ellis | | | 50,000 | | | | 3/31/2010 | | | $ | 2.19 | | | | 11/14/2018 | |
| | | | 50,000 | | | | 3/31/2011 | | | $ | 2.19 | | | | 11/14/2018 | |
| | | | | | | | | | | | | | | | | |
| Kenneth Kossin | | | 5,000 | | | | 3/31/2010 | | | $ | 22.21 | | | | 5/21/2017 | |
| | | | 5,833 | | | | 3/31/2010 | | | $ | 9.82 | | | | 5/23/2018 | |
| | | | 5,834 | | | | 3/31/2011 | | | $ | 9.82 | | | | 5/23/2018 | |
| | | | 15,000 | | | | 3/31/2010 | | | $ | 2.51 | | | | 11/13/2018 | |
| | | | 15,000 | | | | 3/31/2011 | | | $ | 2.51 | | | | 11/13/2018 | |
| | | | | | | | | | | | | | | | | |
| Paul Civils | | | 4,000 | | | | 3/31/2010 | | | $ | 22.21 | | | | 5/21/2017 | |
| | | | 4,000 | | | | 3/31/2010 | | | $ | 9.82 | | | | 5/23/2018 | |
| | | | 4,000 | | | | 3/31/2011 | | | $ | 9.82 | | | | 5/23/2018 | |
| | | | 13,333 | | | | 3/31/2010 | | | $ | 2.51 | | | | 11/13/2018 | |
| | | | 13,334 | | | | 3/31/2011 | | | $ | 2.51 | | | | 11/13/2018 | |
| | | | | | | | | | | | | | | | | |
| Tina Stehle | | | 4,000 | | | | 3/31/2010 | | | $ | 22.21 | | | | 5/21/2017 | |
| | | | 4,000 | | | | 3/31/2010 | | | $ | 9.82 | | | | 5/23/2018 | |
| | | | 4,000 | | | | 3/31/2011 | | | $ | 9.82 | | | | 5/23/2018 | |
| | | | 13,333 | | | | 3/31/2010 | | | $ | 2.51 | | | | 11/13/2018 | |
| | | | 13,334 | | | | 3/31/2011 | | | $ | 2.51 | | | | 11/13/2018 | |
| | | | | | | | | | | | | | | | | |
| Curtis Stout | | | 4,000 | | | | 3/31/2010 | | | $ | 22.21 | | | | 5/21/2017 | |
| | | | 4,167 | | | | 3/31/2010 | | | $ | 9.82 | | | | 5/23/2018 | |
| | | | 4,167 | | | | 3/31/2011 | | | $ | 9.82 | | | | 5/23/2018 | |
| | | | 13,333 | | | | 3/31/2010 | | | $ | 2.51 | | | | 11/13/2018 | |
| | | | 13,334 | | | | 3/31/2011 | | | $ | 2.51 | | | | 11/13/2018 | |
| · | Be of proven integrity with a record of substantial achievement; |
For all employees,| · | Have demonstrated ability and sound business judgment based on broad experience; |
| · | Be able and willing to devote the required amount of time to the Company's affairs, including attendance at board of director and committee meetings; |
| · | Be analytical and constructive in the objective appraisal of management's plans and programs; |
| · | Be committed to maximizing shareholder value and building a sound company, long-term; |
| · | Be able to develop a professional working relationship with other directors and contribute to the board or directors' working relationship with senior management of the Company; |
| · | Be able to exercise independent and objective judgment and be free of any conflicts of interest with the Company; and |
| · | Be able to maintain the highest level of confidentiality. |
The Nominating Committee considers the Named Executive Officers listed above, vestingforegoing factors, among others, in identifying nominees; however, there is no policy requiring the Nominating Committee to consider the impact of any one factor by itself. The Nominating Committee also will accelerate for 518,347 stock optionsconsider the board of directors' current and anticipated needs in terms of number, diversity, specific qualities, expertise, skills, experience, and background. In addition, the Corporate Governance Guidelines state that the board of directors should have a balanced membership, with diverse representation of relevant areas of experience, expertise, and backgrounds. The Nominating Committee seeks nominees that collectively will build a capable, responsive, and effective board of directors, prepared to acquire Common Shares previously awarded, with exercise prices between $2.19address strategic, oversight, and $22.21.governance challenges. The outstanding equity awardsNominating Committee believes that the backgrounds and qualifications of the directors as a group should provide a significant mix of experience, knowledge, and abilities that will be acceleratedenable the board of directors to fulfill its responsibilities.
The Nominating Committee will consider shareholder-recommended nominees for membership on the board of directors. For a shareholder to properly nominate a candidate for election as a result of MAK Capital’s acquisition ofone-fifthdirector at a meeting of the Common Shares will accelerate compensation expenseshareholders, the shareholder must be a shareholder of approximately $299,000. Of this amount, approximately $268,000 and $31,000 is compensation expense that otherwise would not have been recognized until fiscal years 2011 and 2012, respectively.
For Mr. Ellis, 52,427 restricted Common Shares will vest upon MAK Capital’s acquisition ofone-fifthrecord at the time the notice of the Common Shares if such acquisition occurs prior to March 31, 2010,nomination is given and at the original vesting date, which will result in additional compensation expense in fiscal year 2010 of approximately $221,000.
RECOMMENDATION BY THE BOARD OF DIRECTORS
After careful consideration, including a thorough reviewtime of the proposed Control Share Acquisition with Agilysys’ financial and legal advisors, and consultation with Agilysys’ management, the Board has determined to express no opinion and remain neutral with respect to the Control Share Acquisition.
In evaluating the Control Share Acquisition and determining to express no opinion and remain neutral with respect to the Control Share Acquisition, the Board considered each of the factors set forth below, some of which may weigh against the Control Share Acquisition and some of which may weigh in favor of the Control Share Acquisition. The Board has determined that these factors are closely balanced and that an individual shareholder’s
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decision on the question is likely to depend primarily on how the shareholder weighs these factors and other factors that the shareholder may consider relevant. Accordingly, the Board urges each shareholder to make its own decision regarding the Control Share Acquisition based on all available information, including the factors considered by the Board as described below and any other factors that the shareholder deems relevant.
The Board did not find it practicable, and did not attempt, to quantify, rank or otherwise assign relative weight to these factors, and different members of the Board may have given different weight to the different factors.
In addition, Mr. Cueva recused himself from the Board’s discussion of these factors and did not participate in the vote in which the Board determined to express no opinion and remain neutral with respect to the Control Share Acquisition.
POTENTIAL FACTORS WEIGHING AGAINST THE CONTROL SHARE ACQUISITION:
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| • | Effective Control/Blocking Position with no “Change of Control” Premium. Under Ohio law, a sale of Agilysys, or a business combination or majority share acquisition involving the issuance of Common Shares entitling the holders to exercise one-sixth or more of the voting power of Agilysys, requires the approval of two-thirds of the outstanding Common Shares. If the Control Share Acquisition is approved by shareholders, MAK Capital would gain a level of control that would enable it to effectively block any of these types of transactions. It might also enable MAK Capital to initiate or substantially assist any sale transaction without paying a customary“change-in-control” premium. MAK Capital declined to enter into a standstill or other agreement with Agilysys that would limit its ability to exercise its voting power. |
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| • | Influence over Corporate Policy and Agilysys’ Strategic Plan. If the Control Share Acquisition is approved by shareholders, MAK Capital would have the right, but not the obligation, to acquire in the aggregate one-fifth or more, but less than one-third, of the outstanding Common Shares. What a significant shareholder might do in response to a particular decision of the Board could potentially affect the interests of Agilysys and the other shareholders, making this a legitimate inquiry for the Board in considering the range of possible corporate policies and strategies in the future. This effect couldmeeting, be enhanced in the case of a very large, albeit still less-than-majority, shareholder. |
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| • | Reduction in Common Share Trading Volume. The Control Share Acquisition, if and when completed, could cause a reduction in Agilysys’ daily trading volume that may discourage future purchases by prospective shareholders. This effect could be enhanced or diminished depending on whether MAK Capital ultimately acquired the maximum percentage of the Common Shares that approval of the Control Share Acquisition would permit. |
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| • | Possible Impact on Future Strategic Transactions. Shareholders could be prevented from participating in any future strategic transactions involving Agilysys, including a sale of Agilysys or a significant part of its assets or capital stock, as well as acquisitions or mergers requiring shareholder approval, if MAK Capital opposed such a transaction. Although no such transaction is pending or contemplated at this time, Agilysys cannot predict if or when any such transaction may result in the future or what MAK Capital’s position in relation to such a transaction might be. |
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| • | Acceleration of Outstanding Equity Awards. As noted above in the section titled “Change of Control Implications,” if a change of control (as defined in the relevant plan documents and agreements) occurs, vesting of stock options and restricted stock awards will be accelerated, and Agilysys will be required to accelerate compensation expense of approximately $299,000 and recognize additional compensation expense relating to restricted shares of $221,000. In addition, Agilysys will lose retention value of these in-the-money awards, which are largely held by senior management team members. In addition, the first trigger of the double trigger in Mr. Ellis’ Change of Control Agreement would be triggered when MAK Capital reaches an ownership level of one-fifth of the Common Shares. |
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| • | Uncertainty of MAK Capital’s Disposition of Shares. MAK Capital declined to enter into a standstill or other agreement with Agilysys regarding the disposition of the Common Shares it owns or will acquire in the future. As a result, MAK Capital could dispose of a significant percentage of its |
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| | Common Shares over a short period of time in the near future, and such disposition could negatively impact the Common Share price. |
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| • | Risk of Litigation. The Board is confident that it has made all of its determinations in connection with the proposed Control Share Acquisition in compliance with all applicable legal standards. As with any significant corporate initiative, however, there is the possibility that a shareholder or other party with a financial interest in Agilysys who may disagree with the Board could initiate litigation regarding the Board’s determinations, the Control Share Acquisition, or subsequent events that could hypothetically be attributed to the Control Share Acquisition. While Ohio law is comparatively favorable to directors in the exercise of their business judgment, and such litigation is often without merit or even frivolous, such litigation could nonetheless be costly, and Agilysys would bear the cost of such litigation, both financially and in terms of the Board’s and management’s diverted attention. |
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| • | Impact of MAK Capital’s Increased Holdings. In addition to the influences noted above, if MAK Capital maximizes its ownership of Additional Shares permitted pursuant to the Control Share Acquisition, MAK Capital will increase its Common Share holdings from 19.18% to approximately 33%, and as a 33% holder of Common Shares, MAK Capital will avail itself of certain rights and abilities not available to MAK Capital prior to the Control Share Acquisition. These include the right to call a special shareholder meeting and the ability to elect one director in each class of directors nominated at Agilysys’ Annual Meeting (through cumulative voting). |
POTENTIAL FACTORS WEIGHING IN FAVOR OF THE CONTROL SHARE ACQUISITION:
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| • | Possible Increased Share Price. It is possible that the initiation of the Control Share Acquisition will increase the price per Common Share in the short-term, subject to its eventual successful completion, and as such some larger number of shareholders may be able to sell their Common Shares at a gain not available otherwise, or not available as soon, had the Control Share Acquisition not been approved by shareholders. However, the long-term sustainability of the increased Common Share price is uncertain and may be negatively affected by other factors noted above. Also, Ohio and federal law would impose additional substantive and procedural requirements on an actual tender offer by MAK Capital, so, unless MAK Capital were willing to incur the additional time and expense of tender offer compliance, the actual number of shareholders from whom MAK Capital could purchase the shares it seeks would be limited. |
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| • | Cooperative Relationship with MAK Capital. To date, MAK Capital has been supportive of the initiatives and strategic plans that Agilysys management has set forth. MAK Capital has indicated that it does not intend, either alone or in concert with any other person, to exercise control of Agilysys. We believe that MAK Capital maintains and desires to maintain a low profile in the investment community. MAK Capital has worked with Agilysys management in a very constructive manner since its first acquisition of Common Shares in early 2007. In addition, we believe that Mr. Cueva’s appointment to the Board in June 2008 has been positive and constructive. However, in the absence of a standstill agreement, MAK Capital’s current intentions with respect to Common Shares are not a limitation on its future actions. |
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| • | Increased Short-Term Liquidity. MAK Capital’s Control Share Acquisition may increase short-term liquidity of the Common Shares even if MAK Capital does not effectuate its acquisition. The positive signal associated with announcement may lead to increased liquidity as shareholders react to the news, allowing shareholders desiring to trade to have the benefit of additional liquidity. Whether there would be any longer-term effect is unknown and would likely depend on subsequent developments. |
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| • | Positive Endorsement of Recent Changes. MAK Capital is our largest shareholder and has been represented on our Board by Mr. Cueva since June 2008. It may be reasonable to conclude that MAK Capital’s desire to acquire additional Common Shares indicates that it is pleased with the recent actions taken by Agilysys as well as our overall changes in governance and improved profitability. |
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CHAPTER 1704 TRANSACTIONS
The Board considered that, under Chapter 1704 of the Ohio Revised Code, a shareholder who controls more than 10% of the voting power entitled to vote at the meeting in the election of directors, for an issuing public corporation, defined as an “interested shareholder,” is prohibited from engaging in certain transactions, such as mergers, dispositions and asset acquisitions (i.e., a Chapter 1704 transaction), with the issuing public corporation for three years following the date the 10% threshold was crossed. On February 5, 2008, MAK Capital filed with the SEC a Form 3 indicating 10% ownership of Common Shares as of January 31, 2008. Based on the Acquiring Person Statement, MAK Capital owns 19.18% of the outstanding Common Shares. Under Chapter 1704 of the Ohio Revised Code, the three-year prohibition is irrevocable unless the interested shareholder obtained approval from the Board before becoming an interested shareholder. MAK Capital did not seek or obtain any such approval from the Board before becoming an interested shareholder. Because MAK Capital is an interested shareholder, it is prohibited from engaging in any Chapter 1704 transaction until the three-year prohibition expires. Accordingly, a Control Share Acquisition would not likely facilitate in the near future any potential value-creating transaction for Agilysys shareholders between Agilysys and MAK Capital because MAK Capital is prohibited from engaging in any Chapter 1704 transaction for three years following the date the 10% threshold was crossed. Moreover, MAK Capital hashave given no indication that it intends to propose such a transaction with Agilysys.
THE BOARD OF DIRECTORS OF AGILYSYS IS EXPRESSING NO OPINION AND IS REMAINING NEUTRAL WITH RESPECT TO THE CONTROL SHARE ACQUISITION.
IF YOU WOULD LIKE TO VOTE ON THE PROPOSED CONTROL SHARE ACQUISITION, PLEASE MARK, SIGN AND DATE THE ENCLOSED WHITE PROXY CARD AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE. EXECUTION AND RETURN OF THE WHITE PROXY CARD WILL NOT PRECLUDE YOU FROM ATTENDING THE SPECIAL MEETING OR FROM VOTING IN PERSON.
OHIO CONTROL SHARE ACQUISITION STATUTE
The Ohio Control Share Acquisition Statute provides that, unless the articles of incorporation or the regulations of an issuing public corporation provide otherwise, any control share acquisition of such corporation shall be made only with the prior authorization of the shareholders. An “issuing public corporation” is defined in the Ohio Revised Code as a corporation, such as Agilysys, organized for profit under the laws of Ohio, with 50 or more shareholders, that has its principal place of business, principal executive offices or substantial assets in Ohio, and as to which there is no close corporation agreement in existence. See Exhibit D for other definitions under the Ohio Control Share Acquisition Statute.
A “control share acquisition” is defined in the Ohio Revised Code as the acquisition, directly or indirectly, by any person of shares of an issuing public corporation that, when added to all other shares of the issuing public corporation in respect of which such person may exercise or direct the exercise of voting power, would entitle such acquiring person, immediately after such acquisition, directly or indirectly, alone or with others, to control any of the following ranges of voting power of such issuing public corporation in the election of directors:
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| • | one-fifth or more but less than one-third of such voting power; |
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| • | one-third or more but less than a majority of such voting power; or |
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| • | a majority or more of such voting power. |
Any person who proposes to make a control share acquisition must deliver an “acquiring person statement” to the issuing public corporation, which statement must include:
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| • | the identity of the acquiring person; |
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| • | a statement that the acquiring person statement is being given pursuant to section 1701.831 of the Ohio Revised Code; |
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| • | the number of shares of the issuing public corporation owned, directly or indirectly, by such acquiring person; |
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| • | the range of voting power in the election of directors under which the proposed acquisition would fall, if consummated (i.e., in excess of 20 percent, 33 and 1/3 percent or 50 percent); |
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| • | a description of the terms of the proposed acquisition; and |
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| • | representations of the acquiring person that the acquisition will not be contrary to law, and that such acquiring person has the financial capacity to make the proposed acquisition (including the facts upon which such representations are based). |
MAK Capital delivered the Acquiring Person Statement to Agilysys on November 20, 2009.
Within 10 days of receipt of a qualifying acquiring person statement, the directors of the issuing public corporation must call a special shareholders meeting to vote on the proposed acquisition. The special shareholders meeting must be held within 50 days of receipt of the acquiring person statement, unless the acquiring person otherwise agrees. The issuing public corporation is required to send atimely written notice of the special meeting as promptly as reasonably practicable to all shareholders of record as of the Record Date set for such special meeting, together with a copy of the acquiring person statement and a statement of the issuing public corporation, authorized by its directors, of the issuing public corporation’s position or recommendation, or that it is taking no position and making no recommendation, with respectnomination to the proposed control share acquisition.
The acquiring person may makeSecretary. To be timely, notice must be received by the proposed control share acquisition only if:
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| • | at a meeting at which a quorum is present, the control share acquisition is authorized by holders of a majority of the voting power entitled to vote in the election of directors represented in person or by proxy at such meeting and the control share acquisition is authorized by a majority of the voting power represented at the meeting in person or by proxy, excluding Interested Shares; and |
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| • | such acquisition is consummated, in accordance with the terms so authorized, within 360 days following such shareholder authorization. |
“Interested Shares” are definedSecretary, in the Ohio Revised Code as shares as to which any of the following persons may exercise or direct the exercise of voting power in the election of directors:
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| • | an acquiring person or its affiliates; |
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| • | an officer of the issuing public corporation elected or appointed by its directors; |
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| • | any employee of the issuing public corporation who is also a director of such corporation; |
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| • | any person who acquires such shares for valuable consideration during the period beginning with the date of the first public disclosure of a proposed control share acquisition of the issuing public corporation and ending on the Record Date, if the aggregate consideration paid or otherwise given by the person who acquired the shares and any other persons acting in concert with such person exceeds $250,000; or |
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| • | any person that transfers such shares for valuable consideration after the Record Date as to shares so transferred if accompanied by an instrument (such as a proxy or voting agreement) that gives the transferee the power to vote those shares. |
Dissenters’ rights are not available to shareholderscase of an issuing public corporation in connection with the authorization of a Control Share Acquisition.
The foregoing summary doesannual meeting, not purport to be a complete statement of the provisions of the Ohio Control Share Acquisition Statute. The foregoing summary is qualified in its entirety by reference to the Ohio Control Share Acquisition Statute (a copy of which is attached as Exhibit D to this Proxy Statement, along with Section 1701.01 of the Ohio Revised Code, which defines certain terms used therein) and the Ohio Revised Code.
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CERTIFICATION OF INTERESTED SHARES
As described above, in order to comply with the Ohio Control Share Acquisition Statute, authorization of the acquisition of Common Shares pursuant to the Control Share Acquisition requires both the First Majority Approval and the Second Majority Approval. In determining whether shareholders have granted the First Majority Approval, any Interested Shares will be included in the tabulation of votes. In determining whether shareholders have granted the Second Majority Approval, any Interested Shares will be excluded from the tabulation of votes.
You should vote on the Control Share Acquisition whether or not any of your Common Shares are “Interested Shares.”
The enclosed WHITE proxy card contains a certification as to whether any Common Shares to be voted by you are Interested Shares. If some but not all of your Common Shares are Interested Shares, you should indicate the number of your Common Shares that are not Interested Shares. If you do not make a certification on the WHITE proxy card, then all of your Common Shares will be presumed to be Interested Shares. In the event that some but not all of your Common Shares are Interested Shares but you do not indicate the number of your Common Shares that are not Interested Shares, then all of your Common Shares will be presumed to be Interested Shares.
For purposes of the Special Meeting, Interested Shares means the Common Shares in respect of which any of the following persons may exercise or direct the exercise of the voting power:
(1) MAK Capital or its affiliates;
(2) Any officer of Agilysys elected or appointed by the directors of Agilysys;
(3) Any employee of Agilysys who is also a director of Agilysys;
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(4) | Any person that acquires such Common Shares for valuable consideration during the Restricted Period if the aggregate consideration paid or given by the person who acquired the Common Shares, and any other persons acting in concert with the person, for all those Common Shares exceeds $250,000; or |
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(5) | Any person that transfers such Common Shares for valuable consideration after the Record Date as to Common Shares so transferred, if accompanied by the voting power in the form of a blank proxy, an agreement to vote as instructed by the transferee, or otherwise. |
If you acquired,less than 90 days nor more than 120 days prior to the commencementanniversary of the Restricted Period, Common Sharesprevious year's annual meeting; provided, however, that are not Interested Shares and you acquire Common Shares duringif the Restricted Period for an aggregate consideration in excessdate of $250,000, then such Common Shares that you acquired during the Restricted Period will be Interested Shares that may not be voted in determining whether the Second Majority Approval has been obtained. However, you will be entitled to have the Common Shares that you acquiredannual meeting is advanced more than 30 days prior to or delayed by more than 30 days after the Restricted Period voted in determining whether the Second Majority Approval has been obtained if an appropriate certification of eligibility is provided on the WHITE proxy card.
If you complete the certification but later learn that your Common Shares are Interested Shares or that Common Shares which you transferred have become Interested Shares, you should notify Agilysys in writing at 28925 Fountain Parkway, Solon, Ohio 44139, Attention: Secretary. If you have any questions as to whether your Common Shares are Interested Shares, you should contact our proxy solicitor, Georgeson Inc., at1-800-336-5134.
EMPLOYEE PLAN VOTING
Participants in the 401(k) Retirement Plan of Agilysys, Inc. (the “Plan”) have the right to instruct the trusteeanniversary of the Plan as to how to have the Common Shares held in a participant’s plan account voted at the Special Meeting. Participantspreceding year's annual meeting, notice must return their instructions to the trustee on the enclosed WHITE voting instruction card by nobe delivered not later than the close of business on December 29, 2009. If participants dothe later of the 90th day prior to such annual meeting or the 10th calendar day following the day on which public disclosure of the date of such annual meeting is first made. In the case of a special meeting, timely notice must be received by the Secretary not return timely instructions to the trustee as to how to vote their Common Shares or if the voting instruction card is unsigned, participants’ Common Shares will not be voted. Therefore, it is very important that participants in the Plan provide the trustee with prompt and proper instructions. The Board urges participants to instruct their trustee as to how to vote their Common Shares regarding the Control Share Acquisition proposal on the WHITE voting instruction card. The Board urges participants to instruct their trustee to vote their Common Shares FOR the adjournment proposal.
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ADMITTANCE TO SPECIAL MEETING
You are entitled to attend the Special Meeting only if you were a Agilysys shareholder as oflater than the close of business on the Record Date or hold10th day after the date of such meeting is first publicly disclosed. A shareholder's notice must set forth, as to each candidate:
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| · | Name, age, business address, and residence address of the candidate; |
| · | Principal occupation or employment of the candidate; |
| · | Class and number of shares that are owned of record or beneficially by the candidate; |
| · | Information about the candidate required to be disclosed in a proxy statement complying with the rules and regulations of the SEC; |
| · | Written consent of the candidate to serve as a director if elected and a representation that the candidate does not and will not have any undisclosed voting arrangements with respect to his actions as a director, will comply with the Company's Regulations and all other publicly disclosed corporate governance, conflict of interest, confidentiality, and share ownership and trading policies and Company guidelines; |
| · | Name and address of the shareholder making such nomination and of the beneficial owner, if any, on whose behalf the nomination is made; |
| · | Class and number of shares that are owned of record or beneficially by the shareholder and by any such beneficial owner as of the date of the notice; |
| · | Representation that the shareholder or any such beneficial owner is a holder of record or beneficially of the shares entitled to vote at the meeting and intends to remain so through the date of the meeting; |
| · | Description of any agreement, arrangement, or understanding between or among the shareholder and any such beneficial owner and any other persons (including their names) with respect to such nomination; |
| · | Description of any agreement, arrangement, or understanding in effect as of the date of the shareholder's notice pursuant to which the shareholder, any such beneficial owner, or any other person directly or indirectly has other economic interests in the shares of the Company; |
| · | Representation that the shareholder intends to appear in person or by proxy at the meeting to nominate the person or persons specified in the notice; and |
| · | Representation whether the shareholder intends to deliver a proxy statement and/or form of proxy to holders of outstanding common shares and/or otherwise to solicit proxies in support of the nomination. |
The Nominating Committee may request additional information from such nominee to assist in its evaluation. The Nominating Committee will evaluate any shareholder-recommended nominees in the same way it evaluates nominees recommended by other sources, as described above.
Strategic Review Committee. The Strategic Review Committee held 10 meetings during fiscal year 2016. The purpose of the Strategic Review Committee is to review and evaluate any and all strategic alternatives to the Company's current strategy and to recommend to the board of directors what action, if any, should be taken by the Company.
Board Leadership
The board of directors determined that having an independent director serve as chairman of the board is in the best interest of shareholders at this time. The structure ensures a valid proxygreater role for our independent directors in the oversight of the Company and the active participation in setting agendas and establishing priorities and procedures for the Specialboard of directors. Pursuant to the board of directors' Corporate Governance Guidelines, it is our policy that the positions of chairman of the board and chief executive officer be held by different individuals, except as otherwise determined by the board of directors. Mr. Kaufman has served as Chairman of the Board since 2015.
In 2015, the board established the role of vice-chairman of the board to assist the chairman of the board in the performance of his duties, as directed by the chairman from time to time. Mr. Kolerus has served as vice-chairman of the board since the establishment of the role.
Risk Oversight
Management is responsible for the day-to-day management of risks facing the Company, while the board of directors, as a whole and through its committees, is actively involved in the oversight of such risks. The board of directors' role in risk oversight includes regular reports at board of director and Audit Committee meetings from members of senior management on areas of material risk to the Company, including strategic, financial, operational, and legal and regulatory compliance risks. Management regularly identifies and updates, among other items, the population of possible risks for the Company, assigns risk ratings, prioritizes the risks, assesses likelihood of risk occurrence, develops risk mitigation plans for prioritized risks, and assigns roles and responsibilities to implement mitigation plans. Risks are ranked by evaluating each risk's likelihood of occurrence and magnitude. The board of directors' Compensation Committee, in consultation with management, evaluates our incentive plans to determine if
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the plans' measures or goals encourage inappropriate risk-taking by our employees. As part of its evaluation, the Compensation Committee determined that the performance measures and goals were tied to our business, financial, and strategic objectives. As such, the incentive plans are believed not to encourage risk-taking outside of the range of risks contemplated by the Company's business plan.
Compensation Committee Interlocks and Insider Participation
None of the members of the Compensation Committee during fiscal year 2016 (Messrs. Kaufman, Keating, Kolerus, and Mutch) is or has been an officer or employee of the Company, has had any relationship with the Company required to be disclosed as a related person transactions and none of our executive officers served on the compensation committee (or other committee serving an equivalent function) or board of any company that employed any member of our Compensation Committee or our board of directors during fiscal year 2016.
DIRECTOR COMPENSATION
During fiscal year 2016, compensation for non-employee directors consisted of the following:
| · | $25,000 annual cash retainer for each non-employee director; |
| · | $35,000 annual cash retainer for the chairman of the board; |
| · | $5,000 annual cash retainer to the vice-chairman of the board; |
| · | $10,000 annual cash retainer for the chairman of the Audit Committee; |
| · | $7,500 annual cash retainer for the chairmen of each of the Compensation and Nominating & Corporate Governance Committees; |
| · | $10,000 annual cash retainer for each member of the Audit, Nominating & Corporate Governance, and Compensation Committees, including each chairman; |
| · | $10,000 annual cash retainer to each member of the Strategic Review Committee, including the chairman; |
| · | $5,000 monthly cash retainer for each member of the Strategic Review Committee, including the chairman; |
| · | An award of restricted shares to each non-employee director valued at $70,000 on the grant date. |
We also reimburse our directors for reasonable out-of-pocket expenses in connection with attendance at board of directors and committee meetings.
The fiscal year 2016 equity award for each director, other than Messrs. Colvin and Keating, consisted of 7,675 restricted shares, based on a $9.12 grant date price, and was granted under the 2011 Stock Incentive Plan. The restricted shares vested on March 31, 2016, and provided for pro-rata vesting upon retirement prior to March 31, 2016. The grant was made in June 2015 to the then current non-employee directors; however, Mr. Kaufman declined the award given the significant ownership in the Company by his firm, MAK Capital. Following their initial election to the board at the 2015 Annual Meeting, Messrs. Coleman and Keating received pro-rata grants of 3,278 restricted shares on November 12, 2015, based on a $11.12 grant date price, and otherwise on the same terms as the equity awards for the other directors.
Our directors are subject to share ownership guidelines that require ownership of either (i) three times the director's respective annual cash retainer within two years of service and six times the director's respective annual cash retainer within four years of service; or (ii) 15,000 shares within the first two years following the director's election to the board of directors and 45,000 shares within four years of election. We pay no additional fees for board of director or committee meeting attendance.
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Director Compensation for Fiscal Year 2016
| Director | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Total ($) |
| Donald Colvin | 18,806 | | 36,451 | | 55,257 | |
| Jerry Jones | 51,139 | | 69,996 | | 121,135 | |
| Michael A. Kaufman | 93,024 | | — | | 93,024 | |
| Keith M. Kolerus | 73,560 | | 69,996 | | 143,556 | |
| Melvin Keating | 50,715 | | 36,451 | | 87,166 | |
| John Mutch | 70,042 | | 69,996 | | 140,038 | |
(1)Fees are paid quarterly.
| (2) | Amounts in this column represent the grant date fair value of the restricted shares computed in accordance with Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718. As of March 31, 2016, Mr. Kolerus also held an aggregate of 15,000 shares under unexercised stock options. |
PROPOSAL 1
AMENDMENT OF THE COMPANY'S AMENDED CODE OF REGULATIONS
TO DECLASSIFY THE BOARD
General
Our board of directors, in its continuing review of corporate governance matters, has concluded that it is advisable and in the best interests of the Company and its shareholders to amend the Amended Code of Regulations (the "Regulations") to declassify the board of directors. Accordingly, the board of directors recommends that the shareholders approve the amendment to the Regulations attached to this proxy statement as Appendix A. Under the present classified board of directors structure, the board of directors is classified into two classes as follows: Donald Colvin, Melvin Keating and Keith M. Kolerus constitute the Class A directors, with a term ending at the annual meeting of shareholders in 2017; and James H. Dennedy, Jerry Jones, Michael A. Kaufman and John Mutch constitute the Class B directors, with a term ending at this Annual Meeting. You
Declassification Proposal
After careful consideration and upon the recommendation of the Nominating and Corporate Governance Committee, which is comprised entirely of independent directors, our board of directors has determined that it is advisable and in the best interests of our Company and its shareholders to declassify our board of directors to allow our shareholders to vote on the election of directors generally on an annual basis, rather than on a staggered basis.
The board of directors recognizes that a classified structure may offer several advantages, such as promoting board continuity and stability and encouraging directors to take a long-term perspective toward strategic planning. Additionally, classified boards may motivate potential acquirers seeking control to initiate arms-length discussions with the board of directors, rather than engaging in unsolicited or coercive takeover tactics, since potential acquirers are unable to replace the entire board of directors in a single election, thereby better enabling the board of directors to maximize shareholder value and to ensure the equal and fair treatment of shareholders. On the other hand, the board of directors recognizes that a classified structure may reduce directors' accountability to shareholders because such a structure does not enable shareholders to express a view on each director's performance by means of an annual vote. Moreover, many institutional investors believe that board classification limits the ability of shareholders to influence corporate governance policies and to hold management accountable for implementing those policies. In light of these views, a number of
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corporations have determined that principles of good corporate governance dictate that all directors of a corporation should be preparedelected annually.
In considering whether a proposal to declassify the board of directors was advisable, the board of directors carefully considered the arguments in favor of and against the current classified board structure, and determined that annual elections of directors will give the shareholders of the Company a greater opportunity to evaluate the performance of the Company's directors by allowing them to vote on each director annually rather than once every two years. The board of directors approved the amendment to the Regulations and recommended that it be submitted to the shareholders for approval at the Annual Meeting.
If our shareholders approve this proposal 1, then effective immediately upon such approval, all of our Class A directors whose term does not expire at this Annual Meeting will resign and all of the resigning directors will be nominated to stand for election to a one-year term expiring at the annual meeting of shareholders in 2017, along with all of our Class B Directors, whose term already expires at this Annual Meeting, and who have also been nominated to stand for election to a one year term expiring at the annual meeting of shareholders in 2017.
As a result, assuming proposal 1 is approved, at this Annual Meeting and at subsequent annual meetings, absent future changes to our board election procedures, all of our directors would be subject to election to serve until the next annual meeting of shareholders and until their successors have been duly elected and qualified.
Vote Required
Approval of the amendment to the Regulations to declassify our board of directors requires the affirmative vote of two-thirds of the voting power of the Company's outstanding common stock. Abstentions and broker non-votes will have the same effect as votes against the proposal, although they will be considered present photo identification for admittance.the purpose of determining a quorum. Validly executed proxies will be voted in favor of this proposal 1 unless a shareholder indicates otherwise when submitting its proxy.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE AMENDMENT TO THE COMPANY'S REGULATIONS TO DECLASSIFY THE BOARD. PROXY CARDS RECEIVED BY THE COMPANY WILL BE VOTED "FOR" PROPOSAL 1 UNLESS THE SHAREHOLDER SPECIFIES OTHERWISE ON THE PROXY CARD.
PROPOSAL 2
General
Our board of directors currently consists of seven members, classified into two classes as follows: Donald Colvin, Melvin Keating and Keith M. Kolerus constitute the Class A directors, with a term ending at the annual meeting of shareholders in 2017; and James H. Dennedy, Jerry Jones, Michael A. Kaufman and John Mutch constitute the Class B directors, whose term expires at this Annual Meeting. In each case, subject to earlier death, resignation, removal or retirement, the directors remain in office until their respective successors are duly elected and qualified, notwithstanding the expiration of the otherwise applicable term.
Declassification Proposal
As described in proposal 1 above, our board of directors approved an amendment to our Regulations to eliminate the classified board of directors and recommended that the amendment be submitted to the shareholders for approval. If the shareholders approve proposal 1, the amendment to our Regulations will become immediately effective in
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advance of the election of directors at the Annual Meeting. Messrs. Colvin, Keating and Kolerus, whose term does not expire at the Annual Meeting, will resign, and they, together with Messrs. Dennedy, Jones, Kaufman and Mutch, whose term expires at this Annual Meeting, have been nominated for election to serve until the next annual meeting and until their respective successors are duly elected and qualified.
However, if proposal 1 is not approved, Messrs. Dennedy, Jones, Kaufman and Mutch, whose term is expiring, will stand for election to a two-year term expiring at the annual meeting of shareholders in 2018, and Messrs. Colvin, Keating and Kolerus will not resign and will continue to serve for the remainder of the term for which they were elected.
Nominees for Director
If proposal 1 is approved, our board of directors will be declassified, and each of the seven nominees, if elected at this Annual Meeting, will serve for a one-year term expiring at the Annual Meeting to be held in 2017 and until their respective successors have been duly elected and qualified, subject to their earlier death, resignation, retirement or removal. Upon the recommendation of the Nominating and Corporate Governance Committee, comprised of independent directors, the board of directors has nominated each of Donald Colvin, James H. Dennedy, Jerry Jones, Michael A. Kaufman, Melvin Keating, Keith M. Kolerus and John Mutch for election to the board of directors for a term of one year, to serve until the annual meeting of shareholders in 2017 and until their successors have been duly elected and qualified, subject to their earlier death, resignation, retirement or removal. Information concerning the nominees for election at this Annual Meeting is set forth below.
If proposal 1 is not approved, our board of directors will remain classified, and each Class A director will continue to serve for the remainder of his term. Upon the recommendation of the Nominating and Corporate Governance Committee, the board of directors has nominated James H. Dennedy, Jerry Jones, Michael A. Kaufman and John Mutch, whose term expires at this Annual Meeting, for election to the board of directors for a term of two years, to serve until the annual meeting of shareholders in 2018 and until his successor has been duly elected and qualified, subject to his earlier death, resignation, retirement or removal.
Unless authority to vote for any of these nominees is withheld, the shares represented by a validly executed proxy will be voted "FOR" the election of each of Messrs. Colvin, Dennedy, Jones, Kaufman, Keating, Kolerus and Mutch for a one-year term if proposal 1 is approved, or "FOR" the election of each of Messrs. Dennedy, Jones, Kaufman and Mutch for a two-year term if proposal 1 is not approved. Each nominee has indicated his willingness to serve as a director, if elected.
A biography for each director nominee and our continuing directors follows and, if applicable, arrangements under which a director was appointed to the board of directors or information regarding any involvement in certain legal or administrative proceedings is provided. Additional information about the experiences, qualifications, attributes, or skills of each director and director nominee in support of his service on the board of directors is also provided.
DIRECTOR NOMINEES
| Donald Colvin | Age 63 | Director since 2015 |
Interim Chief Financial Officer of Isola Group Ltd. from June 2015 to July 2016. Chief Financial Officer of Caesars Entertainment Corporation from November 2012 to January 2015 and before that Executive Vice President and CFO of ON Semiconductor Corp. from April 2003 to October 2012. Prior to joining ON Semiconductor, Mr. Colvin held a number of financial leadership positions, including Vice President of Finance and CFO of Atmel Corporation, CFO of European Silicon Structures as well as several financial roles at Motorola Inc. Mr. Colvin is a Director and Chairman of the Audit Committee of Isola Group, a director of UTAC (a private Singapore company) and a Member of the Advisory Board for Conexant. Mr. Colvin holds a B.A. in economics and an M.B.A. from the University of Strathclyde in Scotland. Mr. Colvin's qualifications and extensive experience include financial management, capital
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structure, financial strategy, significant public company leadership and board experience, and recent experience in the hospitality industry which the Company serves.
| James H. Dennedy | Age 50 | Director since 2009 |
President and Chief Executive Officer of the Company since October 2011. Interim President and Chief Executive Officer since May 2011. Principal and Chief Investment Officer with Arcadia Capital Advisors, LLC, an investment management company making active investments in public companies, from April 2008 to May 2011. President and Chief Executive Officer of Engyro Corporation, an enterprise software company offering solutions in systems management, from January 2005 to August 2007. Previously a director of Entrust, Inc., I-many, Inc., and NaviSite, Inc. As a former President of a division of a publicly-held software company and as a Chief Executive Officer of a private software company, Mr. Dennedy has experience in the technology industry. In addition, if you areMr. Dennedy has extensive experience in investment strategy, capital structure, financial strategy, mergers and acquisitions, and significant public company leadership and board experience.
| Jerry Jones | Age 60 | Director since 2012 |
Chief Ethics and Legal Officer, Executive Vice-President of Acxiom Corporation, a record holder, your namemarketing technology and services company, since 1999. His responsibilities include oversight of its legal, privacy and security teams and various strategic initiatives, including the strategy and execution of mergers and alliances. Prior to joining Acxiom, Mr. Jones was a partner with the Rose Law Firm in Little Rock, Arkansas, where he specialized in problem solving and business litigation for 19 years, representing a broad range of business interests. Previously he was a director of Entrust, Inc. He is a 1980 graduate of the University of Arkansas School of Law and holds a bachelor's degree in public administration from the University of Arkansas. As the Chief Legal Officer of a technology company, Mr. Jones has extensive experience with legal, privacy, and security matters. He has also led the strategy and execution of mergers and alliances and international expansion efforts.
| Michael A. Kaufman | Age 44 | Director since 2014 |
Mr. Kaufman is the President of MAK Capital, a financial investment advisory firm based in New York, NY, which he founded in 2002. Mr. Kaufman holds a B.A. degree in Economics from the University of Chicago, where he also received his M.B.A. He also earned a law degree from Yale University. As President of MAK Capital, the Company's largest shareholder, Mr. Kaufman is uniquely qualified to represent the interests of the Company's shareholders as a director and chairman of the board. Additionally, Mr. Kaufman's qualifications and experience include capital markets, investment strategy and financial management.
| Melvin Keating | Age 69 | Director since 2015 |
Director of Red Lion Hotels Corporation since July 2010 and Chairman of the Board from May 2013 to 2015. Since November 2008, Mr. Keating has been a consultant to several private equity firms, an industry where he previously worked. Prior to that, he was President and CEO of Alliance Semiconductor from 2005 to 2008. Mr. Keating also serves as a director of Modern Systems, Inc. Mr. Keating holds a B.A. from Rutgers University as well as an M.S. in Accounting and an M.B.A. in Finance from The Wharton School of the University of Pennsylvania. Mr. Keating has substantial experience leading public companies in the technology and hospitality industries and is qualified in global operations, financial management and strategy and capital markets.
| Keith M. Kolerus | Age 70 | Director since 1998 |
Chairman of the Board of Directors of the Company from 2008 to 2015. Retired Vice President, American Division, National Semiconductor, a producer of semiconductors and a leader in analog power management technology, from 1996 to February 1998. Mr. Kolerus served as Chairman of the Board of Directors of National Semiconductor Japan Ltd., from 1995 to 1998, and Chairman of the Board of Directors of ACI Electronics, LLC, from 2004 to 2008. Mr. Kolerus has extensive experience in engineering, global operations, private and public companies, software and hardware technology companies, government contracting, capital markets, financial management, and the technology industry. Mr. Kolerus' prior experiences as a board chairman also qualify him to serve on the board of directors.
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| John Mutch | Age 60 | Director since 2009 |
Founder and managing partner of MV Advisors LLC. Mr. Mutch founded MV Advisors in January of 2006 as a strategic block investment firm which provides focused investment and operational guidance to both private and public companies. MV Advisors' current portfolio includes companies in the technology, active lifestyle and sports segments valued in excess of $100M. Mr. Mutch's career as an operating executive in the technology sector includes serving as Chairman and Chief Executive Officer of BeyondTrust software from 2008 to 2013, as a Director and Chief Executive Officer of Peregrine Systems (Nasdaq: PRGS) from 2003 to 2005, and as a Director and Chief Executive Officer on HNC Software (Nasdaq: HNCS) from 1999 to 2002. Previously he spent eight years in a variety of executive sales and marketing positions at Microsoft Corporation. Mr. Mutch current serves on the board of directors of Steel Excel (Nasdaq: SXCL). Mr. Mutch holds a B.S. In Economics from Cornell University and an M.B.A. from the University of Chicago. As a Chief Executive Officer of an IT company, Mr. Mutch has extensive experience in the technology industry, restructuring, financial management and strategy, capital markets, sales management, and marketing.
Vote Required
If a quorum is present at the annual meeting, the nominees for election as directors will be verified againstelected if they receive the listgreatest number of record holdersvotes cast at the Annual Meeting present in person or represented by proxy and entitled to vote. Abstentions and broker non-votes will have no effect on the Record Date priorelection of directors.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES. PROXY CARDS RECEIVED BY THE COMPANY WILL BE VOTED "FOR" THE ELECTION OF EACH OF THE NOMINEES UNLESS THE SHAREHOLDER SPECIFIES OTHERWISE ON THE PROXY CARD.
PROPOSAL 3
APPROVAL OF AGILYSYS, INC. 2016 STOCK INCENTIVE PLAN
The Board voted unanimously to being admittedapprove and recommend to shareholders the approval of the 2016 Stock Incentive Plan (the "2016 Plan") (this proposal 3), the principal provisions of which are described below. The following is a summary of the material terms of the 2016 Plan and is qualified in its entirety by the full text of the 2016 Plan as set forth as Appendix B to this Proxy Statement.
The Board believes that stock-based awards are an important element of the Company's compensation programs. The 2016 Plan promotes the Company's compensation philosophy and objectives by (i) providing long-term incentives to those persons with significant responsibility for the success and growth of the Company; (ii) motivating participants to achieve the long-term success and growth of the Company; (iii) providing a vehicle to tie a significant portion of compensation to the Special Meeting.long-term performance of the Company's shares; (iv) enabling the Company to attract and retain skilled and qualified officers, other employees, directors, and consultants who are expected to contribute to the Company's success in a competitive market for such individuals; (v) facilitating ownership of the Company's shares; and (vi) aligning the personal interests of officers, employees, and others in the Company's long-term growth and profitability with the interests of the Company's shareholders. The 2016 Plan will replace the Company's 2011 Stock Incentive Plan that was approved by shareholders at the 2011 Annual Meeting (the "2011 Plan"). As of June 30, 2016, approximately 1,978,255 shares were available for grant under the 2011 Plan, and the Board approved the 2016 Plan to provide a sufficient pool, and broad variety, of stock and stock-based awards. Subject to shareholder approval at the Annual Meeting, the 2016 Plan will be effective as of June 8, 2016. Information on the total number of shares available under the Company's existing equity compensation plans and subject to outstanding options and rights is presented in the Equity Compensation Plan Information table on page 37.
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The 2016 Plan allows the Company the flexibility to grant a variety of stock and stock-based awards, including stock options and stock appreciation rights, granted separately or in tandem with each other, and restricted shares and restricted share units, both time vested or conditioned on the attainment of performance goals. The 2016 Plan is also designed to allow compliance with Section 162(m) of the Internal Revenue Code (the "Code"). It is intended that awards under the 2016 Plan with a performance component (which does not include time-vested share awards) generally will satisfy the requirements for performance-based compensation under Section 162(m) while granting the Compensation Committee the authority to grant nonperformance-based awards where it deems appropriate. Section 162(m) generally places a $1,000,000 limit on the tax deduction allowable for compensation paid (or accrued for tax purposes) with respect to the Chief Executive Officer and the three other highest-paid executives (excluding the chief financial officer) during a tax year; unless the compensation meets certain requirements. All stock incentive awards to the Company's most highly compensated executives that may be made over the next few years are expected to be granted under the 2016 Plan. By seeking shareholder approval of the 2016 Plan, the Board is also asking our shareholders to approve the material terms of the performance goals set forth in the 2016 Plan, which are described below.
Summary of the 2016 Plan
Shares Subject to the 2016 Plan
The aggregate number of common shares that may be issued under the 2016 Plan is 2,000,000, plus shares remaining available for grant under prior plans as discussed below. The 2016 Plan provides for appropriate adjustments in the number of shares subject to the 2016 Plan (and other share limitations contained therein and described below) and to grants previously made if there is a share split, dividend, reorganization, or other relevant change affecting the Company's corporate structure or its shares. If youshares under an award are not a record holder but hold Common Shares through a broker or nominee (i.e., in street name), you should provide proof of beneficial ownership on the Record Date, such as your most recent account statementissued prior to the Record Date,expiration, termination, cancellation, or forfeiture of the award, then those shares would again be available for inclusion in future grants. Upon the effective date of the 2016 Plan, prior Company equity plans for which shares remain available for grant will be terminated. The shares available under such prior plans will be made available for grant under the 2016 Plan, as well as shares subject to outstanding awards under such prior plans which thereafter are forfeited, settled in cash or cancelled, or expire; provided that all outstanding awards under such prior plans remain outstanding and are administered and settled in accordance with the provisions of the prior plans, as applicable.
Other Share Limitations
The maximum number of shares subject to restricted shares or restricted share units that may be granted under the 2016 Plan is 1,250,000. The maximum number of shares subject to restricted shares or restricted share units that may be granted to an individual in a calendar year is 400,000 shares, and the maximum number of shares subject to stock options or stock appreciation rights that may be granted to an individual in a calendar year is 800,000 shares.
Eligible Participants
Officers and employees of the Company, any consultant to the Company, and the Company's non-employee directors are eligible to receive awards under the 2016 Plan. Awards are granted to those persons with significant responsibility for the Company's success and growth. As of June 30, 2016, approximately 556 employees, including six executive officers, and six non-employee directors were eligible to receive equity awards.
Administration
The 2016 Plan is administered by a committee ("Committee") consisting of at least three directors appointed by the Board, all of whom meet the definitions of the terms "outside director" set forth in the regulations under Section 162(m) of the Code, "independent director" set forth in The Nasdaq Stock Market LLC ("Nasdaq") rules, and
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"non-employee director" set forth in Rule 16b-3 under the Securities Exchange Act of 1934, as amended. Unless determined otherwise by the Board, the Compensation Committee will administer the 2016 Plan and has the authority under the 2016 Plan to (i) select the employees, consultants, and directors to whom awards are granted; (ii) determine the type and timing of awards and the appropriate award agreement evidencing each award; (iii) determine the number of shares covered by each award and all other terms and conditions of awards, not inconsistent with the terms of the 2016 Plan; (iv) determine whether an award is, or is intended to be, performance-based compensation within the meaning of 162(m) of the Code; (v) determine whether terms, conditions, and objectives have been met or, if permissible, should be modified or waived, not inconsistent with the terms of the 2016 Plan; (vi) cancel or suspend an award, or determine whether an amount or payment of an award should be reduced or eliminated; (vii) determine administrative rules, guidelines, and practices governing the 2016 Plan; and (viii) interpret the provisions of and otherwise supervise the administration of the 2016 Plan.
Stock Options
Stock options granted under the 2016 Plan must be in the form of either incentive stock options ("ISOs"), which meet the requirements of Section 422 of the Code, or nonqualified stock options ("NQSOs"), which do not meet those requirements. The term of a stock option is fixed by the Committee, but may not exceed seven years, and stock options are exercisable at such time or times as determined by the Committee. The exercise price of a stock option cannot be less than the fair market value of the shares on the date of grant, which generally means the last closing price of a share as reported on Nasdaq on the date of the grant. The grantee may pay the stock option exercise price either in cash or such other manner authorized in the 2016 Plan or the applicable award agreement, including the tender of shares. Shares tendered by participants as full or partial payment of the exercise price will not become available for issuance under the 2016 Plan. The 2016 Plan prohibits stock option repricing without shareholder approval.
Code Limitations on Incentive Stock Options
The Code currently places certain limitations on ISO awards. In addition to the other limitations described in the 2016 Plan, an ISO may only be granted to full or part-time employees (including officers and directors who are also employees) of the Company. The total fair market value of shares subject to ISOs which are exercisable for the first time by any participant in any given calendar year cannot exceed $100,000 (valued as of the date of grant). No ISO may be exercisable more than three months following termination of employment for any reason other than death or disability, nor more than one year with respect to death or disability terminations, or such stock option will no longer qualify as an ISO and shall be treated as an NQSO. ISOs will also be non-transferable in accordance with the provisions of the Code. Additional restrictions apply to the grant of ISOs to holders of in excess of 10% of the Company's outstanding shares.
Stock Appreciation Rights
The Committee may grant a stock appreciation right ("SAR") separately or in connection with a stock option granted under the 2016 Plan. If a grantee exercises a SAR, the grantee will receive an amount equal to the excess of the then-fair market value of the shares with respect to which the SAR is being exercised over the stock option exercise price of the shares, in the case of a SAR in connection with a stock option, or the exercise price of the SAR, in the case of an independent SAR. The SAR exercise price must be at least 100% of the fair market value of the underlying shares on the date of grant, and the term of such SAR may not exceed seven years. Payment may be made in cash, in shares, or in a combination of cash and shares, as the Committee determines. If a SAR granted in connection with a stock option is exercised in whole or in part, the right under the related stock option to purchase shares with respect to which the SAR has been exercised will terminate to the same extent. If a stock option is exercised, any SAR related to the shares purchased upon exercise of the stock option will terminate. To the extent that the number of shares reserved for issuance upon the grant of a SAR exceeds the number actually issued upon exercise of a SAR, such shares will not become available for issuance under the 2016 Plan. The 2016 Plan prohibits SAR repricing without shareholder approval.
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Restricted Share and Restricted Share Unit Awards
The Committee may grant restricted share awards which consist of shares issued by the Company to a participant for no consideration, or for a purchase price which may be below their fair market value, and are subject to forfeiture in the event of termination of the participant's employment prior to vesting and subject to restrictions on sale or other transfer by the participant. Participants who hold restricted shares have voting rights with respect to the shares and have the right to receive dividend distributions, in cash or shares, payable to the extent the restrictions on the applicable restricted shares lapse. The Committee may also grant restricted share unit awards which are substantially similar to restricted share awards but which generally do not give the participant-holder the rights of a shareholder prior to lapse of the restrictions and, upon such lapse, may be settled in cash, shares, or a combination of both. The Committee may provide for the payment in cash or shares equal to the amount of dividends paid from time to time on the number of shares that would become payable upon vesting of the restricted share unit award. The Committee may provide that restrictions lapse after the passage of time (time-vested), upon certain events (such as death, disability, or retirement) or upon the attainment of specified performance objectives (performance-vested). The Committee may waive any restrictions or accelerate the date or dates on which restrictions lapse except no waiver may apply to a term that is not within the Committee's discretion to waive under the 2016 Plan.
Performance-Based Exception
The Committee may grant awards in a manner that is intended to qualify for the performance-based exception to the deductibility limitations of Section 162(m) of the Code and conditioned upon the achievement of performance goals as the Committee shall determine, in its sole discretion. The performance goals shall be based on one or more performance measures, and the Committee shall specify the time period or periods during which the performance goals must be met. The performance measure(s) may be described in terms of objectives that are related to the individual participant, the Company, or a subsidiary, division, department, region, function, or business unit of the Company, and shall consist of one or more or any combination of the following criteria: cash flow, profit, revenue, stock price, market share, sales, net income, operating income, return ratios, earnings per share, return on equity, working capital, total assets, net assets, return on assets, return on sales, return on invested capital, earnings, gross margin, costs, shareholders' equity, shareholder return and/or specific, objective and measurable non-financial objectives, productivity, or productivity improvement. Performance goals may be expressed in absolute terms or relative to the performance of other entities. The Committee may adjust or modify the performance objectives or periods, provided that any such modifications meet the requirements of Section 162(m) of the Code, to the extent applicable unless the Committee determines that such requirements should not be satisfied. Awards intended to qualify for the performance-based exception shall not vest or be paid until the Committee certifies that the performance goals have been achieved.
Transferability of Awards
No award is transferable other than by will or the laws of descent and distribution, except the Committee may, in its discretion, provide that an award (other than an ISO) is transferable without consideration to a participant's family member (as defined in the 2016 Plan), subject to such terms and conditions as the Committee may impose. All Awards shall be exercisable, during the participant's lifetime, only by the participant or a permitted transferee.
Termination of Employment
Generally, awards are forfeited upon a participant's termination of employment; however, the 2016 Plan provides that the Committee: (i) may allow a participant to exercise vested stock options or SARs for a period of time after termination, if not terminated for cause; and (ii) has discretion to provide the extent to which, if any, the vesting of any award is accelerated or forfeited due to a participant's, death, disability, or retirement, provided that, for awards intended to be performance-based compensation within the meaning of Section 162(m) of the Code, no vesting may occur or no distribution may be made prior to the attainment of the performance goals.
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Change in Control
Except as otherwise provided in an award agreement, upon a "change in control" as defined in the 2016 Plan: (i) all outstanding stock options and SARs automatically become fully exercisable; and (ii) all restricted share and restricted share unit awards automatically become fully vested.
Recoupment Policy
Awards are subject to forfeiture or repayment pursuant to the terms of any applicable compensation recoupment or recovery policy adopted by the Company, Committee, or Board, including any policy adopted to comply with the rules of any stock exchange on which the shares are traded or the SEC.
Additional Restrictions
Awards may be subject to additional restrictions adopted by the Company, Committee, or Board, including share retention guidelines, minimum holding requirements or other similar evidencerestrictions.
Discontinuation of ownership. If you do2016 Plan, Amendments, and Award Substitutions
The Board of Directors may amend, alter, or discontinue the 2016 Plan at any time, provided that any such amendment, alteration, or discontinuance has been approved by the Company's shareholders, if shareholder approval is required under applicable laws, regulations, or exchange requirements (including for the purpose of qualification under Section 162(m) of the Code as "performance-based compensation"), and does not provide photo identificationmaterially and adversely impair the rights of any grantee, without his or comply with the other procedures outlined above upon request, you will nother consent, under any award previously granted. The 2016 Plan could be admittedamended without shareholder approval in certain nonmaterial ways that could result in an increased cost to the Special Meeting.
Company. No Awards shall be made under the 2016 Plan after the tenth anniversary of the effective date.
VOTING, SOLICITATION AND CERTAIN OTHER INFORMATIONNew 2016 Plan Benefits
As of June 30, 2016, the Committee has approved the following awards under the 2016 Plan, subject to shareholder approval of the 2016 Plan at the annual meeting:
| Name and Position | Dollar Value (1) | Number of Shares (2) |
James H. Dennedy President and Chief Executive Officer | $497,317 | 47,499 |
Janine K. Seebeck Senior Vice President, Chief Financial Officer and Treasurer | $143,116 | 13,669 |
Kyle C. Badger Senior Vice President, General Counsel and Secretary | $66,999 | 6,399 |
Larry Steinberg Senior Vice President, Chief Technology Officer | $112,891 | 10,782 |
| Jimmie D. Walker, Jr., Senior Vice President, Global Revenue | $27,628 | 2,638 |
| Executive Officers as a Group | $884,973 | 84,523 |
| Non-Executive Director Group | $350,000 | 30,355 |
| Non-Executive Officer Employee Group | $1,111,423 | 96,934 |
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Proxies| (1) | Dollar values for restricted stock grants to non-employee directors and non-executive employees are based on the last reported sale price of our common stock on June 8, 2016 ($11.53). Dollar values for restricted stock grants to executive officers are based on the last reported sale price of our common stock on June 30, 2016 ($10.47). |
(2) | All restricted share grants to non-employee directors and non-executive employees were made on June 8, 2016. All grants to executive officers were made on June 30, 2016. Grants to non-employee directors vest on March 31, 2017. Grants to employees, including executive officers, vest in three annual increments beginning on March 31, 2017, with the exception of the grants to Mr. Dennedy and Ms. Seebeck, which will vest when the performance criteria for such grants is obtained or one year from the date of shareholder approval of the 2016 Plan if the performance criteria are obtained sooner. |
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Any additional future awards under the 2016 Plan are granted in the discretion of the Committee, and therefore are not currently determinable, as awards are discretionary and participation is determined each fiscal year.
Certain Federal Tax Consequences with Respect to Awards
The following paragraphs are a summary of the general federal income tax consequences to U.S. taxpayers and the Company of awards granted under the 2016 Plan under current law. This is not intended to constitute tax advice, and tax consequences for an individual may be solicited by mail, telephone, telegram, telecopy, electronic maildifferent.
There are no Federal income tax consequences to a participant or the Company upon the grant of stock options and SARs. When an NQSO or SAR is exercised, the participant realizes taxable compensation (ordinary income) at that time equal to, for an NQSO, the difference between the aggregate option exercise price and the fair market value of the shares on the date of exercise and, for an SAR, the aggregate amount of cash and fair market value of any shares received upon exercise. The Company is generally entitled to a tax deduction to the extent, and at the time, that the participant realizes compensation income. Upon the exercise of an NQSO or SAR, the 2016 Plan requires the participant to pay to the Company any amount necessary to satisfy applicable Federal, state, or local tax withholding requirements. Upon the exercise of an ISO, a participant recognizes no immediate taxable income, except that the excess of the fair market value of the shares acquired over the Internetoption exercise price will constitute a tax preference item for the purpose of computing the participant's alternative minimum tax liability. Income recognition is deferred until the shares acquired are disposed of and any gain will be treated as long-term capital gain if the minimum holding period is met (two years from the date of grant and one year from the date of exercise), but otherwise will be treated as ordinary income in person. Solicitations may be made by directors, officers, investor relations personnel and other employeesan amount determined under the applicable tax rules. There is no tax deduction for the Company when an ISO is exercised. The participant's tax treatment upon a disposition of Agilysys, noneshares acquired through the exercise of whom will receive additional compensation for such solicitations. Agilysys has requested banks, brokerage houses and other custodians, nominees and fiduciaries to forward alla stock option is dependent upon the length of its solicitation materialstime the shares have been held. There is no tax consequence to the beneficial owners of the Common Shares they hold of record. Agilysys will reimburse these record holders for customary clerical and mailing expenses incurred by them in forwarding these materials to their customers.
Agilysys has retained Georgeson Inc. for solicitation and advisory servicesCompany in connection with the Special Meetingdisposition of the shares except that the Company would be entitled to a tax deduction, in an amount equal to the ordinary income recognized by the participant, in the case of a disposition of shares acquired upon exercise of an ISO before the ISO holding period has been satisfied.
Generally, no taxes are due upon a grant of restricted shares or restricted share units. An award of restricted shares becomes taxable when it is no longer subject to a substantial risk of forfeiture (i.e., becomes vested or transferable). The taxation of restricted shares may be accelerated by an election under Section 83 of the Code, if permitted. Income tax is paid at ordinary income rates on the value of the restricted shares when the restrictions lapse, and Agilysys’ communicationsthen at capital gain rates with shareholdersrespect to any further gain (or loss) when the shares are sold. In the case of restricted share units, the participant has taxable ordinary income upon receipt of payment. In all cases, the Company has a tax deduction when the participant recognizes ordinary income subject to other applicable limitations and restrictions.
Grants may qualify as performance-based compensation under Section 162(m) of the Code. This status is intended to preserve Federal income tax deductions by the Company with respect to annual compensation required to be taken into account under Section 162(m) of the Code that is in excess of $1 million and paid to the Company's chief executive officer and three next most highly compensated executive officers, excluding the chief financial officer. To qualify, grants must be made by a committee consisting solely of two or more "outside directors" (as defined under Section 162 regulations) and satisfy the limit on the total number of shares that may be awarded to any one participant during any calendar year. In addition, for grants other than options to qualify, the granting, issuance, vesting, or retention of the grant must be contingent upon satisfying one or more performance criteria, as established and certified by a committee consisting solely of two or more "outside directors." The 2016 Plan permits 162(m) qualified grants but also permits the Committee to grant awards which do not qualify where it deems that appropriate.
Tax withholding requirements may be satisfied through the withholding of shares deliverable in connection with an award, as determined by the Committee. Shares withheld by, or otherwise remitted to, the Company to satisfy a participant's tax withholding obligations upon the lapse of restrictions of restricted shares or the exercise of options or SARs granted under the 2016 Plan or upon any other payment of issuance of shares under the 2016 Plan will not become available for issuance under the 2016 Plan.
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Finally, the 2016 Plan is designed to meet requirements for exemptions from coverage under Section 409A of the Code governing nonqualified deferred compensation. The Committee is expressly authorized to take such actions as may be necessary to avoid adverse tax consequences thereunder.
The foregoing is only a summary of the effect of federal income taxation upon participants and the Company with respect to the Control Share Acquisition. Georgeson Inc. will receive a feegrant and exercise of $25,000 for its services and reimbursement of expenses, including phone calls. Agilysys has agreed to indemnify Georgeson Inc. against certain liabilities and expenses, including certain liabilities and expensesawards under the federal securities laws. Georgeson Inc.2016 Plan. It does not purport to be complete and does not discuss the tax consequences of a participant's death or the provisions of the income tax laws of any municipality, state, or foreign country in which the participant may reside.
Required Vote and Recommendation of the Board of Directors
The affirmative vote of the holders of shares representing a majority of the common shares present in person or represented by proxy and entitled to vote will solicit proxies from individuals, brokers, banks, bank nomineesbe required to approve proposal 3. The effect of an abstention is the same as a vote "AGAINST" proposal 3, and other institutional holders.a broker non-vote will have no effect on proposal 3.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 3. PROXY CARDS RECEIVED BY THE COMPANY WILL BE VOTED "FOR" PROPOSAL 3 UNLESS THE SHAREHOLDER SPECIFIES OTHERWISE ON THE PROXY CARD.
EXECUTIVE OFFICERS
The following are biographies for each of our current, non-director executive officers. The biography for Mr. Dennedy, our President and Chief Executive Officer, and a director, is provided above.
| Name | Age | Current Position | Previous Positions |
| Janine K. Seebeck | 40 | Senior Vice President, Chief Financial Officer and Treasurer since August 2013. | Vice President and Controller November 2011 to August 2013. Vice President of Finance, Asia Pacific, at PGi; from 2008 to April 2011. Vice President, Corporate Controller at Premiere Global Services, Inc. from 2002 to 2008. |
| Kyle C. Badger | 48 | Senior Vice President, General Counsel and Secretary since October 2011. | Executive Vice President, General Counsel and Secretary at Richardson Electronics, Ltd. from 2007 to October 2011. Senior Counsel at Ice Miller LLP from 2006 to 2007. Partner at McDermott, Will & Emery LLP from 2003 to 2006. |
| Rehan Jaddi | 44 | Senior Vice President, Customer Support & Service Solutions, since December 2014. | Vice President of Product Engineering, from June 2012 to December 2014. Principal Group Program Manager at Microsoft from 2004 to 2012. |
| Larry Steinberg | 48 | Senior Vice President and Chief Technology Officer since June 2012. | Principal Development Manager, Microsoft Corporation from August 2009 to May 2012, and Principal Architect from June 2007 to July 2009; Founder and Chief Technology Officer of Engyro Corporation from March 1995 to May 2007. |
| Jimmie D. Walker, Jr. | 56 | Senior Vice President, Global Revenue since January 2016. | Vice President, Sales and Marketing November 2014 to January 2016; Vice President of Sales, Codeforce 360 from May 2013 to October 2014; Business Development Principle, Edutainment Media from October 2005 to May 2013. |
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The entire expense of the solicitation of proxies by the Board for the Special Meeting is being borne by Agilysys. Agilysys’ costs incidental to this proxy solicitation include expenditures for printing, postage, legal and related expenses, and are expected to be approximately $[170,000]. Agilysys’ total costs incurred to date in furtherance of or in connection with this proxy solicitation are approximately $[].
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BENEFICIAL OWNERSHIP OF COMMON SHARES
The following table shows the number of Common Sharescommon shares beneficially owned as of November 13, 2009, unless otherwise indicated, by:July 19, 2016 by (i) each current director; (ii) all individuals serving as the chief executive officer or chief financial officer for Agilysys during the fiscal year ended March 31, 2009;our Named Executive Officers; (iii) the other three most highly compensated executive officers at March 31, 2009 whose total compensation exceeded $100,000 for the fiscal year ended March 31, 2009; (iv) two additional individuals who would have been included in the foregoing had they been serving as an executive officer of Agilysys at March 31, 2009; (v) all directors and our executive officers as a group; and (vi)(iv) each person who is known by us to beneficially own more than 5% of our Common Shares.common shares.
Name | Common Shares | Shares Subject to Exercisable Options | Restricted Shares (1) | Total Shares Beneficially Owned (1) | Percent of Class (2) |
| Directors and Nominees | | | | | |
| Donald Colvin | 3,278 | | — | | — | | 3,278 | | * |
| Jerry Jones | 28,218 | | — | | — | | 28,218 | | * |
| Michael A. Kaufman (3) | 7,056,934 | | — | | — | | 7,056,934 | | 30.8 |
| Keith M. Kolerus | 141,495 | | 15,000 | | — | | 156,495 | | * |
| Melvin Keating | 3,278 | | — | | — | | 3,278 | | * |
| John Mutch | 4,837 | | — | | — | | 4,837 | | * |
| Named Executive Officers | | | | | |
| Kyle C. Badger | 41,091 | | 54,419 | | 34,230 | | 129,740 | | * |
| James H. Dennedy | 242,015 | | 201,861 | | 87,134 | | 531,010 | | 2.3 |
| Janine Seebeck | 22,866 | | 37,727 | | 40,693 | | 101,286 | | * |
| Larry Steinberg | 103,598 | | 68,385 | | 51,103 | | 223,086 | | 1.0 |
| Jimmie D. Walker, Jr. | 1,213 | | 3,555 | | 25,850 | | 30,618 | | * |
| All directors and executive officers | 7,687,421 | | 394,538 | | 259,548 | | 8,341,507 | | 35.7 |
| Other Beneficial Owners | | | | | |
MAK Capital One, LLC et al 590 Madison Avenue, 9th Floor New York, New York 10022 | 7,056,934 (4) | | | | 30.8 |
RGM Capital, LLC 9010 Strada Stell Court, Suite 105 Naples, FL 34109 | 2,244,809 (5) | | | | 9.8 |
Discovery Group I, LLC 191 North Wacker Drive, Suite 1685 Chicago, Illinois 60606 | 2,231,855 (6) | | | | 9.7 |
Dimensional Fund Advisors LP 6300 Bee Cave Road Building One Austin, Texas, 78746 | 1,863,204 (7) | | | | 8.1 |
Name | Common Shares | Shares Subject to Exercisable Options | Restricted Shares (1) | Total Shares Beneficially Owned (1) | Percent of Class (2) |
| Other Beneficial Owners | | | | | |
BlackRock, Inc. 55 East 52nd Street New York, New York 10055 | 1,558,181 (8) | | | | 6.8 |
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| | | | | | | |
| | | Number of
| | |
| | | Common Shares
| | |
| | | Beneficially
| | Percent
|
| Name | | Owned(1) | | # of Class |
| |
Directors (Excluding Named Executive Officers)(2) | | | | | | |
| Thomas A. Commes | | | 94,927 | (3) | | .4 |
| R. Andrew Cueva | | | 2,646,161 | (4) | | 11.5 |
| James H. Dennedy | | | 17,279 | (5) | | .1 |
| Howard V. Knicely | | | 60,927 | (6) | | .3 |
| Keith M. Kolerus | | | 95,434 | (7) | | .4 |
| Robert A. Lauer | | | 72,427 | (8) | | .3 |
| Robert G. McCreary, III | | | 99,211 | (8) | | .4 |
| John Mutch | | | 11,713 | (9) | | .1 |
Named Executive Officers(2) | | | | | | |
| Peter J. Coleman | | | 0 | (10) | | — |
| Paul Civils, Jr. | | | 54,584 | (11) | | .2 |
| Martin F. Ellis | | | 482,161 | (12) | | 2.1 |
| Kenneth J. Kossin Jr. | | | 66,933 | (13) | | .3 |
| Arthur Rhein | | | 761,735 | (14) | | 3.3 |
| Richard A. Sayers, II | | | 71,427 | (15) | | .3 |
| Tina Stehle | | | 41,100 | (16) | | .2 |
| Curtis Stout | | | 49,549 | (17) | | .2 |
| All Directors and Executive Officers as a group (19 persons) | | | 4,702,534 | (18) | | 19.4 |
Other Persons | | | | | | |
| MAK Capital One, LLC et al. | | | 4,418,447 | (19) | | 19.2 |
590 Madison Avenue, 9th Floor
New York, New York 10022 | | | | | | |
| Ramius LLC et al. | | | 2,267,813 | (20) | | 9.8 |
599 Lexington Avenue, 20th Floor
New York, New York 10022 | | | | | | |
| Dimensional Fund Advisors L.P. | | | 2,142,962 | (21) | | 9.3 |
1299 Ocean Ave., 11th Floor
Santa Monica, California 90401 | | | | | | |
| Barclays Global Investors, NA | | | 1,740,748 | (22) | | 7.5 |
45 Fremont Street
San Francisco, California 94105 | | | | | | |
| Goodwood, Inc. | | | 1,143,405 | (23) | | 5.0 |
212 King Street West, Suite 201
Toronto, ON, Canada M5H 1K5 | | | | | | |
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| | |
| (1) | | Except where otherwise indicated, beneficialBeneficial ownership of the Common Shares held by the persons listed in the table aboveshares comprises both sole voting and dispositive power, or voting and dispositive power that is shared with thea spouse, of such persons. |
|
(2) | | The address of each Director and Named Executive Officer is 28925 Fountain Parkway, Solon, Ohio 44139. |
|
(3) | | Includes (i) 45,000 Common Sharesexcept for restricted shares for which the Director had the right to acquire within 60 days of November 13, 2009, through the exercise of stock options granted to the Director under the 1999 and 2000 Stock Option Plans for outside Directors, and the 2000 Stock Incentive Plan, and (ii) 11,713 restricted Common Shares which the Director was granted under the 2006 Stock Incentive Plan, as to which the Directorindividual has sole voting power but no dispositive power until such Common Sharesshares vest. |
| (2) | * indicates beneficial ownership of less than 1% on July 19, 2016. |
(4) | (3) | Comprised entirely of Common Sharesshares beneficially owned by MAK Capital Fund L.P. and excludes Common Shares beneficially owned by Paloma International L.P.One L.L.C. Mr. Cueva may be deemed to share beneficial ownership in Common Shares thatKaufman is the managing member of MAK Capital Fund L.P. may be deemedOne L.L.C. and shares voting and dispositive power with respect to beneficially own. However, Mr. Cueva disclaims beneficial ownership of the Common Shares, except to the extent of his pecuniary interest in MAK Capital Fund L.P.’s interest in such Common Shares. The inclusion in this table of the Common Shares beneficially owned by MAK Capital Fund L.P. shall not be deemed an admission by Mr. Cueva of beneficial ownership of all of the reported Common Shares. |
|
(5) | | Comprised entirely of 17,279 restricted Common Shares which the Director was granted under the 2006 Stock Incentive Plan, as to which the Director has sole voting power, but no dispositive power until such Common Shares vest. |
|
(6) | | Includes (i) 30,000 Common Shares which the Director had the right to acquire within 60 days of November 13, 2009, through the exercise of stock options granted to the Director under the 2000 Stock Option Plan for outside Directors and the 2000 Stock Incentive Plan, and (ii) 11,713 restricted Common Shares which the Director was granted under the 2006 Stock Incentive Plan, as to which the Director has sole voting power, but no dispositive power until such Common Shares vest. |
|
(7) | | Includes (i) 47,500 Common Shares which the Director had the right to acquire within 60 days of November 13, 2009, through the exercise of stock options granted to the Director under the 1999 and 2000 Stock Option Plans for outside Directors, and the 2000 Stock Incentive Plan, and (ii) 11,713 restricted Common Shares which the Director was granted under the 2006 Stock Incentive Plan, as to which the Director has sole voting power, but no dispositive power until such Common Shares vest. |
|
(8) | | Includes (i) 37,500 Common Shares which the Director had the right to acquire within 60 days of November 13, 2009, through the exercise of stock options granted to the Director under the 2000 Stock Option Plan for outside Directors and the 2000 Stock Incentive Plan, and (ii) 11,713 restricted Common Shares which the Director was granted under the 2006 Stock Incentive Plan, as to which the Director has sole voting power, but no dispositive power until such Common Shares vest. |
|
(9) | | Comprised entirely of 11,713 restricted Common Shares which the Director was granted under the 2006 Stock Incentive Plan, as to which the Director has sole voting power, but no dispositive power until such Common Shares vest. |
|
(10) | | On October 21, 2008, Mr. Coleman’s employment was terminated. |
|
(11) | | Includes (i) 4,035 Common Shares held in the Plan, (ii) 15,700 performance restricted Common Shares granted under the 2006 Stock Incentive Plan, as to which Mr. Civils has sole voting power, but no dispositive power until such Common Shares vest, and (iii) 33,333 Common Shares which Mr. Civils had the right to acquire within 60 days of November 13, 2009, through the exercise of stock options granted to him under the 2006 Stock Incentive Plan. |
|
(12) | | Includes (i) 252,000 Common Shares which Mr. Ellis had the right to acquire within 60 days of November 13, 2009, through the exercise of stock options granted to him under the 2000 Stock Incentive Plan, (ii) 12,000 restricted Common Shares which Mr. Ellis was granted under the 2006 Stock Incentive Plan, as to which Mr. Ellis has sole voting power, but no dispositive power until such Common Shares vest, and (iii) 117,600 performance restricted Common Shares granted under the 2006 Stock Incentive Plan, as to which Mr. Ellis has sole voting power, but no dispositive power until such Common Shares vest.shares. |
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| (4) | | |
(13) | | Includes (i) 45,833 Common Shares which Mr. Kossin had the right to acquire within 60 days of November 13, 2009, through the exercise of stock options granted to him under the 2000 and 2006 Stock Incentive Plans, and (ii) 21,100 performance restricted Common Shares granted under the 2006 Stock Incentive Plan, as to which Mr. Kossin has sole voting power, but no dispositive power until such Common Shares vest. |
|
(14) | | On October 20, 2008, Mr. Rhein retired from Agilysys. Includes (i) 500,000 Common Shares that Mr. Rhein has the right to acquire within 60 days of November 13, 2009, through the exercise of stock options granted to him under the 2000 Stock Incentive Plan, and (ii) 97,175 Common Shares that Mr. Rhein has pledged as security pursuant to a brokerage margin account. |
|
(15) | | On March 15, 2009, Mr. Sayer’s employment was terminated. All of Mr. Sayer’s Common Shares are directly held by him. |
|
(16) | | Includes (i) 20,000 Common Shares which Ms. Stehle had the right to acquire within 60 days of November 13, 2009, through the exercise of stock options granted to her under the 2000 and 2006 Stock Incentive Plans, and (ii) 21,100 performance restricted Common Shares granted under the 2006 Stock Incentive Plan, as to which Ms. Stehle has sole voting power, but no dispositive power until such Common Shares vest. |
|
(17) | | Includes (i) 35,499 Common Shares which Mr. Stout had the right to acquire within 60 days of November 13, 2009, through the exercise of stock options granted to him under the 2000 and 2006 Stock Incentive Plan, and (ii) 13,200 performance restricted Common Shares granted under the 2006 Stock Incentive Plan, as to which Mr. Stout has sole voting power, but no dispositive power until such Common Shares vest. |
|
(18) | | The number of Common Shares shown as beneficially owned by the Directors and Executive Officers as a group includes (i) 1,110,831 Common Shares which such persons have the right to acquire within 60 days of November 13, 2009, through the exercise of stock options granted to them under the 2000 Stock Incentive Plan, the 1995 Stock Option Plan for outside Directors, the 1999 Stock Option Plan for outside Directors and the 2000 Stock Option Plan for outside Directors, (ii) 239,000 performance restricted Common Shares granted under the 2006 Stock Incentive Plan, as to which such persons have sole voting power, but no dispositive power until such Common Shares vest, (iii) 99,557 restricted Common Shares granted under the 2006 Stock Incentive Plan, plus any reinvested restricted Common Shares, as to which such persons have sole voting power, but no dispositive power until such Common Shares vest, (iv) 4,035 Common Shares held by Mr. Civils in the Plan, and (v) 3,415,428 Common Shared directly held by such persons, which includes 2,646,161 Common Shares beneficially owned by MAK Capital Fund LP, in which Mr. Cueva may be deemed to share beneficial ownership. See footnote (4) for information regarding Mr. Cueva’s disclaimer of beneficial ownership of the MAK shares listed in the table. |
|
(19) | | As reported on a Schedule 13D/A dated November 23, 2009.May 12, 2015. MAK Capital One LLC has shared voting and dispositive power with respect to all of the shares. MAK Capital One LLC serves as the investment manager of MAK Capital Fund LP ("MAK Fund") and other funds and accounts. MAKMAK-ro Capital One LLC has shared voting and dispositive power with respect to 4,418,447 Common Shares.Master Fund LP ("MAK-ro Fund"). MAK GP LLC is the general partner of MAK Capital Fund LP.and MAK-ro Fund. Michael A. Kaufman, managing member and controlling person of MAK GP LLC and MAK Capital One LLC,L.L.C., has shared voting and dispositive power with respect to 4,418,447 Common Shares.all of the shares. MAK Capital Fund LP has shared voting and dispositive power with respect to 2,645,161 Common Shares. Paloma International L.P., through its subsidiary Sunrise Partners Limited Partnership,3,424,973 shares. MAK-ro Fund has shared voting and dispositive power with respect to 1,772,286 of Common Shares. Trust Asset Management LLP is the general partner of1,859,675 shares. Paloma International L.P. ("Paloma"), through its subsidiary Sunrise Partners Limited Partnership, and S. Donald Sussman, is the controlling person of Paloma, International L.P. and Trust Asset Management LLP and hashave shared voting and dispositive power with respect to 1,772,286 of Common Shares. R. Andrew Cueva is a Managing Director of MAK Capital One LLC.shares. The principal business address of MAK Capital One LLC, MAK GP LLC and Messrs.Mr. Kaufman and Cueva is 590 Madison Avenue, 9th Floor, New York, New York 10022. The principal address of MAK Capital Fund LP is c/o Dundee Leeds Management Services Ltd., 129 Front Street, Hamilton, HM 12, Bermuda. The principal business address of MAK-ro Fund is c/o Dundee Leeds Management Services Ltd., Waterfront Centre, 2nd Floor, 28 N. Church Street, P.O. Box 2506, Grand Cayman KY1-1104, Cayman Islands. The principal address of Paloma International L.P. and Sunrise Partners Limited Partnership is Two America Lane, Greenwich, Connecticut06836-2571. The principal business address for Mr. Sussman is 217 Commercial Street, Portland, Maine 04101. |
On May 31, 2011, MAK Fund, Paloma and Computershare Trust Company, N.A. (the "Trustee") entered into an Amended and Restated Voting Trust Agreement (the "Revised Voting Trust Agreement") to clarify the effect on the voting trust created by the Voting Trust Agreement dated as of December 31, 2009, were the reporting persons (named above) to beneficially own one-third or more of the Company's outstanding voting securities as a result of a decrease in the total number of voting securities outstanding. In such event, regardless of the reporting persons' economic interest in the Company, its voting power will be effectively limited to no more than 23% or 27% of the voting securities in the event of a shareholder vote on (i) a merger, consolidation, conversion, sale or disposition of stock or assets or other business combination which requires approval of two-thirds of the Company's voting power (a "Strategic Transaction") or (ii) a transaction other than a Strategic Transaction which requires approval of two-thirds of the Company's voting power (an "Other Transaction"), respectively. In connection with a Strategic Transaction or Other Transaction, the reporting persons would continue to possess the total voting power only over a number of voting securities that would equal the total voting power it would possess were it to hold only one-third of the voting securities. The Revised Voting Trust Agreement will become effective if and when the number of shares owned by the reporting persons equals or exceeds one-third of the voting securities then outstanding as a result of a decrease in the total number of voting securities outstanding. Until such time, the Voting Trust Agreement will remain in full force and effect.
The Voting Trust Agreement provides that, for transactions requiring at least two-thirds of the voting power to approve, Trustee will vote shares as follows: (i) for a Strategic Transaction, vote shares that exceed 20% of the outstanding shares in favor of, against, or abstaining from voting in the same proportion as all other shares voted by shareholders (including reporting persons' shares that do not exceed the 20% threshold); and (ii) for Other Transactions, vote shares that exceed 25% of the outstanding shares in favor of, against, or abstaining from voting in the same proportion as all other shares voted by shareholders (including reporting persons' shares that do not exceed the 25% threshold). The Voting Trust Agreement terminates (i) if the vote necessary to approve all forms of transactions is lowered to the affirmative vote of holders of shares entitling them to exercise at least a majority of the voting power on the proposal to approve such transactions (from two-thirds); (ii) if MAK Fund and Paloma are no longer members of a "group" for purposes of Section 13(d) of the Securities Exchange Act, then the Voting Trust Agreement terminates with respect to any of MAK Fund and Paloma that beneficially owns not more than 20% of the outstanding shares; (iii) on February 18, 2020, or February 18, 2025 if MAK Fund continues to hold 20% of the outstanding shares; or (v) if another person or entity holds greater than 20% of the outstanding shares that are not subject to a similar voting agreement.
| (5) | As reported on a Schedule 13G/A dated February 12, 2016. RGM Capital, LLC has shared voting and Trust Asset Managementdispositive power with respect to all of the shares. Robert G. Moses is 6100 Red Hook Quarters, Suites C1-C6, St. Thomas, US Virgin Islands00802-1348.the managing member of RGM Capital, LLC, and shares voting and dispositive power with respect to all of the shares. |
|
(20) | (6) | As reported on a Schedule 13D/A dated November 18, 2009, as follows: (i) Ramius Value and Opportunity Master Fund, Ltd had sole voting and dispositive power with respect to 989,812 Common Shares; (ii) Ramius Enterprise Master Fund Ltd had sole voting and dispositive power with respect to 249,687 Common Shares; |
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| | |
| | (iii) RCG PB, Ltd. had sole voting and dispositive power with respect to 1,028,314 Common Shares; (iv) Ramius Advisors, LLC had sole voting and dispositive power with respect to 1,278,001 Common Shares; (v) RCG Starboard Advisors, LLC had sole voting and dispositive power with respect to 989,812 Common Shares; (vi) each of Ramius LLC, CowenMay 6, 2015. Discovery Group Inc., RCG Holdings LLC, and C4S & Co., L.L.C. had sole voting and dispositive power with respect to 2,267,813 Common Shares; and (vii) each of Peter A. Cohen, Morgan B. Stark, Jeffrey M. Solomon and Thomas W. Strauss hadhas shared voting and dispositive power with respect to 2,267,813 Common Shares.all the shares. Discovery Equity Partners, L.P. and Daniel J. Donoghue and Michael R. Murphy, managing members of Discovery Group, share voting and dispositive power with respect to all the shares. The business address of the principal office of each of RCG Starboard Advisors, LLC, Parche, LLC, Ramius, LLC, C4S & Co., L.L.C., Cowen Group, Inc., RCG Holdings LLC,Discovery Equity Partners and Messrs. Cohen, Stark, StraussDonoghue and SolomonMurphy is 599 Lexington Avenue, 20th Floor, New York, New York 10022. The address of the principal office of each of Ramius Value and Opportunity Master Fund Ltd, Ramius Enterprise Master Fund Ltd and RCG PB, Ltd. isc/o Citco Fund Services (Cayman Islands) Limited, Corporate Center, West Bay Road, Grand Cayman, Cayman Islands, British West Indies. The principal business address of Mr. Mutch isc/o MV Advisors, LLC, 420 Stevens Avenue,191 North Wacker Drive, Suite 270, Solana Beach, CA 92075. The principal business address of Mr. Zierick isc/o Aspyra, Inc.,26115-A Mureau Road, Calabasas, CA 91320.1685, Chicago, Illinois 60606. |
|
(21) | (7) | As reported on a Schedule 13G/A dated February 9, 2009.2016. Dimensional Fund Advisors LP has sole voting power with respect to 1,824,555 shares and sole dispositive power with respect to all of the shares. |
|
(22) | | As reported on a Schedule 13G dated February 5, 2009. |
|
(23) | (8) | As reported on a Schedule 13G/A dated February 17, 2009.January 20, 2016. BlackRock, Inc. has sole voting power with respect to 1,539,036 shares and sole dispositive power with respect to all of the shares. |
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SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act requires the Company's directors and certain of its executive officers and persons who beneficially own more than 10% of the Company's common shares to file reports of and changes in ownership with the SEC. Based solely on the Company's review of copies of SEC filings it has received or filed, the Company believes that each of its directors, executive officers, and beneficial owners of more than 10% of the shares satisfied the Section 16(a) filing requirements during fiscal year 2016, except as follows: (i) Messrs. Colvin and Keating filed late Form 3s reporting their election to the board of directors in September 2015, (ii) Mr. Walker filed late a Form 3 reporting his appointment as an executive officer in January 2016; (iii) Messrs. Dennedy, Badger, Jaddi, and Steinberg and Ms. Seebeck filed late Form 4s for equity grants made to them in June 2015 and tax withholdings in July 2015 and March 2016; (iv) Mr. Walker filed a late Form 4 reporting a tax withholding in March 2016; (v) Messrs. Jones, Kolerus and Mutch filed late Form 4s for equity grants made to them in June 2015, and (vi) Mr. Mutch filed a late Form 4 reporting a stock sale in March 2015. The Company has recently outsourced the preparation and filing of Section 16(a) reports to improve compliance with the filing requirements of Section 16(a).
COMPENSATION DISCUSSION AND ANALYSIS
Introduction
This Compensation Discussion and Analysis (the "CD&A") describes our executive compensation philosophy and programs for our Named Executive Officers during fiscal year 2016. Compensation arrangements with our Named Executive Officers are governed by the Compensation Committee of our board of directors.
Our Named Executive Officers in fiscal year 2016 consisted of our Chief Executive Officer ("CEO"), our Chief Financial Officer ("CFO"), and our three other most highly compensated officers during fiscal year 2016, as listed below:
| · | James Dennedy, President and Chief Executive Officer |
| · | Janine Seebeck, Senior Vice President, Chief Financial Officer and Treasurer |
| · | Kyle Badger, Senior Vice President, General Counsel and Secretary |
| · | Larry Steinberg, Senior Vice President, Chief Technology Officer |
| · | Jimmie D. Walker, Jr., Senior Vice President, Global Revenue |
Compensation for Messrs. Dennedy, Badger and Steinberg and for Ms. Seebeck consists of the same elements and adheres to the same philosophy and objectives. Mr. Walker, as the head of our sales function, has a compensation structure designed to incent profitable sale revenue growth, and in fiscal year 2016 it was therefore substantially different from that of the other Named Executive Officers.
Compensation Highlights
INTEREST OF CERTAIN PERSONS IN MATTERS TO BE ACTED UPONCompensation Focus for Fiscal Year 2016. The compensation arrangements with our Named Executive Officers for fiscal year 2016 were similar to their compensation arrangements in fiscal year 2015 and recent prior years. After considering the results of our recent votes on Named Executive Officer compensation, which confirmed the Company's philosophy and objectives relative to our executive compensation program, the Compensation Committee continued efforts to maintain market median compensation and link executive pay to performance by maintaining base salaries and annual incentive opportunities for all of the Named Executive Officers at the same level as fiscal year 2015, while focusing annual incentives on improvements over fiscal year 2015 results.
The interests22
Performance Linked Compensation. Our Compensation Committee set fiscal year 2016 compensation, including financial targets for performance-based compensation, for our Named Executive Officers to continue to emphasize pay for performance by setting annual cash incentives based on goals focused on improvements over fiscal year 2015 results for revenue and adjusted EBITDA. In prior years, the Committee had included adjusted operating income as a financial performance metric in setting annual cash incentives. However, as announced by the Company at the beginning of certain personsfiscal year 2016, the Company is now using adjusted EBITDA internally to focus management on the results of the Company's core operations, and the Compensation Committee aligned the metrics for annual cash incentives in fiscal year 2016 accordingly. Adjusted EBITDA, a non-GAAP financial measure, is defined as income before income taxes, interest expense (net of interest income), depreciation and amortization (including amortization of developed technology), and excluding charges relating to (i) legal settlements, (ii) restructuring, severance, and other charges, (iii) asset write-offs and other fair value adjustments, (iv) share-based compensation, and (v) other non-operating (income) expense.
Mr. Dennedy's targeted pay was approximately 74% performance-based, and between 50% and 67% for each of our other Named Executive Officers' targeted pay was performance-based, tied directly to annual goals or long-term equity awards, the value of which is tied directly to an increase in share price.
Our operating results for fiscal year 2016 outperformed our plan. Total net revenue increased by 16% from $103.5 million in fiscal year 2015 to $120.4 million in fiscal year 2016, and adjusted EBITDA increased 258% from $1.2 million in fiscal year 2015 to $4.3 million in fiscal year 2016. As a result, our Named Executive Officers earned approximately 138% of their target annual incentives related to fiscal year 2016.
To further link pay to performance and emphasize long-term shareholder value creation, the only increases in compensation provided to the Named Executive Officers in fiscal year 2016 by the Compensation Committee were in the Control Share Acquisitionform of long-term equity incentive awards granted at the beginning of fiscal year 2016 to three of the Named Executive Officers that were 5 to 15% higher as a percentage of base salary over the prior year.
Chief Executive Officer Compensation. Mr. Dennedy's compensation package for fiscal year 2016 did not change from 2015.
At the beginning of the fiscal year, the Compensation Committee believed Mr. Dennedy's compensation reflected the Compensation Committee's ongoing commitment to link pay to performance and to maintain market median compensation without change. At the end of the fiscal year, the Compensation Committee re-assessed Mr. Dennedy's total compensation for fiscal year 2016 and deemed that the total compensation that would have been earned under his compensation package exceeded what the Committee believed to be market compensation for his position. As a result, the Committee used its discretion to reduce Mr. Dennedy's annual incentive award to 100% of his target incentive amount from the 138% of target that would have been earned based on the Company's financial performance.
Highlights of Mr. Dennedy's 2016 compensation included:
| · | No increase in base salary or annual incentive opportunity; |
| · | Annual incentive payout reduced to target payout to keep total CEO compensation in line with the Committee's determination of market; |
| · | 50% of long-term incentive award, granted as stock-settled appreciation rights, is based entirely on share price improvement, and the balance, granted as restricted stock, is tied to share price; and |
| · | 74% of targeted compensation was variable pay, tied either to performance or share price improvement. |
23
Chief Financial Officer Compensation. Ms. Seebeck's compensation package for fiscal year 2016 also continued to reflect the Compensation Committee's ongoing commitment to link pay to performance and to maintain market median compensation as evidence by the following for Ms. Seebeck:
| · | No increase in base salary or annual incentive opportunity; |
| · | Increase in total compensation to better align to market median made entirely in long term incentive awards; |
| · | 50% of long-term incentive award, granted as stock-settled appreciation rights, is based entirely on share price improvement, and the balance, granted as restricted stock, is tied to share price; |
| · | 59% of targeted compensation was variable pay, tied either to performance or share price improvement, an increase of 9% over fiscal year 2015. |
Senior Vice President, Sales Compensation. Mr. Walker was not an executive officer at the beginning of the fiscal year, and accordingly his compensation was not reviewed or approved by the Compensation Committee. At the beginning of the fiscal year his target cash compensation was $373,108, consisting of $171,428 in base salary and $201,680 in annual incentives based primarily on commissions. In addition, in August 2015, Mr. Walker received a grant of stock-settled appreciation rights equal in value to $42,857, or 25% of his base salary, as part of annual equity grants made to senior non-executive employees of the Company.
In August 2015, in recognition of improved sales results under Mr. Walker's leadership, Mr. Dennedy increased Mr. Walker's target cash compensation to $450,000, consisting of $225,000 in base salary and $225,000 in annual incentives. In January 2016, Mr. Dennedy, with the consent of the Compensation Committee, promoted Mr. Walker to the position of Senior Vice President, Global Revenue, and in connection with this promotion raised Mr. Walker's base salary to $240,000 and his annual incentive to $275,000. The Compensation Committee also awarded Mr. Walker a grant of 25,000 restricted common shares as a retention incentive on the same basis as the retention grants made to other executive officers in fiscal year 2015. As with the prior grants, Mr. Walker's grant vests 5% on the first anniversary of grant, 5% on the second anniversary of grant, and 90% on the third anniversary.
Compensation Philosophy, Objectives, and Structure
Our Compensation Committee adopted its pay philosophy, objectives, and structure for Named Executive Officers to achieve financial and business goals and create long-term shareholder value.
Compensation Philosophy and Objectives. For fiscal year 2016, as in recent prior years, our Compensation Committee's pay philosophy was to pay total compensation at the market median of comparative peer group compensation, with emphasis placed on performance-based compensation, tied directly to annual goals or long-term equity awards, and to link compensation to our business strategy. The Compensation Committee's objective was to establish an overall compensation package to:
| · | Reward the achievement of business objectives approved by our board of directors; |
| · | Tie a significant portion of compensation to the long-term performance of our common shares; |
| · | Provide a rational, consistent, and competitive executive compensation program that is well understood by those to whom it applies; and |
| · | Attract, retain, and motivate executives who can significantly contribute to our success. |
Compensation Structure. Our compensation structure is comprised of:
Base Salary — Base salary provides fixed pay levels aimed to attract and retain executive talent. Variations in salary levels among Named Executive Officers are set forth abovebased on each executive's roles and responsibilities, experience, functional expertise, relation to peer pay levels, competitive assessments, individual performance, and changes in salaries in the section titled “Changeoverall general market and for all employees of Control Implications.” Additionally, the relationshipCompany. Salaries are reviewed annually by our Compensation Committee, and changes in salary are based on these factors and input from our CEO, other than for himself. None of Mr. Cuevathe factors are weighted according to MAK Capital isany specific formula. New salaries generally are based on the Compensation Committee's discretion and judgment but may be based on any of the above-mentioned relevant factors.
Annual Incentives — Annual incentives provide cash variable pay for achievement of the Company's financial, strategic, and operational goals and individual goals, with target incentives set forth aboveas a percentage of salary, designed to reward achievement of goals with an annual cash payment. Variations in target incentive amounts among Named Executive Officers are determined by our Compensation Committee and based on market data, length of time in current role or similar role at another company, and recommendations from our CEO, other than for himself. At the section titled “Background.”
NO DISSENTERS’ RIGHTSend of each fiscal year, the Compensation Committee considers the aggregate compensation of each Named
Dissenters’ rights are not24
Executive Officer and makes adjustments to the annual incentive payment otherwise earned if the aggregate compensation is significantly outside of the market median compensation determined based on the 2014 peer group and other information available to the shareholdersCompensation Committee.
Long-Term Incentives — Long-term incentives are variable, equity incentives designed to drive improvements in performance that build wealth and create long-term shareholder value by tying the value of earned incentives to the long-term performance of our common shares. Target incentives are set as a percentage of salary. Variations in awards among Named Executive Officers are determined by our Compensation Committee after a review of various factors, including recommendations based on market data, individual ability to influence results, length of time in current role or similar role at another company, and recommendations from our CEO, other than for himself.
Compensation Key Considerations
Annual Goal Setting. Annual goals for our Named Executive Officers are tied to our financial, strategic, and operational goals and include business specific financial targets relating to our goals. For fiscal year 2016, the Compensation Committee linked all of the Named Executive Officer's annual incentive goals to the same financial goals for revenue and adjusted EBITDA. At fiscal year-end, the Compensation Committee evaluated the performance of each Named Executive Officer and determined an “issuing public corporation”appropriate award based on established goals.
Variable Pay at Risk. Our compensation philosophy drives the provision of greater at-risk pay to our Named Executive Officers, and variable pay at risk comprised approximately 74% of target annual compensation for our CEO and between 50% and 67% for other Named Executive Officers. Our Named Executive Officers have significant opportunities for long-term, equity-based incentive compensation, higher than for annual cash incentive compensation for each Named Executive Officer, as our philosophy is to tie a significant portion of compensation to the long-term performance of our common shares. As a result, significant emphasis is placed on long-term shareholder value creation, thereby we believe minimizing excessive risk taking by our executives.
Competitive Market Assessments. As described in last year's CD&A, the Committee engaged Pearl Meyer & Partners as its compensation consultant during fiscal year 2014 and received from them a competitive market assessment that evaluated compensation levels for the Company's top four executive positions, including Messrs. Dennedy, Badger and Steinberg and Ms. Seebeck. The Committee has not engaged a compensation consultant since fiscal year 2014. The 2014 assessment compared then current compensation levels for the executives to published compensation data for comparable executives at a peer group determined by the Compensation Committee in 2014 from a group recommended by Pearl Meyer & Partners.
The 2014 peer group consisted of the following software and technology companies:
SPS Commerce Inc. | Rally Software Development Corp. | Ellie Mae Inc. |
| E2open Inc. | Synchronoss Technologies Inc. | BSQUARE Corp. |
Support.com Inc. | QAD Inc. | American Software Inc. |
Sourcefire Inc. | Bottomline Technologies Inc. | Callidus Software Inc. |
| Gigamon Inc. | Actuate Corp. | Model N Inc. |
| Cyan Inc. | PROS Holdings Inc. | inContact Inc. |
| Qualys Inc. | Jive Software Inc. | |
| XRS Corp. | | |
These peer companies were selected based on industry relevance and comparability to the Company's revenue at the time of selection in 2014. The Compensation Committee considered this 2014 assessment in setting Named Executive Officer Compensation at the beginning of fiscal year 2016.
Tally Sheets. Our Compensation Committee analyzed tally sheets at the beginning and end of the fiscal year to review overall compensation and pay mix for each Named Executive Officer. Tally sheets included a three-year look-back of total compensation, including annual cash compensation, long-term incentive awards granted and earned, and benefits and perquisites. Tally sheets also included a cumulative inventory of equity grants by fiscal year, including the value of outstanding equity at the Company's
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current stock price and the value received for prior vesting and exercises of equity. The tally sheets brought together, in one place, all elements of Named Executive Officers' actual compensation and information about wealth accumulation so that our Compensation Committee could analyze the individual elements, the mix of compensation and the aggregate total amount of annual and accumulated compensation. Tally sheets were also used by the Compensation Committee to evaluate internal pay equity among the Named Executive Officers and to determine the impact of employment termination or change of control events. In support of the philosophy of rewarding performance, tally sheets are used by the Compensation Committee to review compensation as compared to expectations, and our Compensation Committee determined that annual compensation set for our Named Executive Officers for fiscal year 2016 was consistent with expectations and with the established compensation philosophy and pay mix guidelines driven by that philosophy.
Fiscal Year 2016 Compensation
The Company's fiscal year 2015 total target compensation ranked approximately at the median of the competitive market assessment provided by Pearl Meyers & Partners during fiscal year 2014, with Mr. Dennedy positioned between the 50th and 75th percentile and Ms. Seebeck and Messrs. Badger and Steinberg positioned just below the 50th percentile. Based on this, the Compensation Committee determined that increases in total compensation were appropriate for Ms. Seebeck and Messrs. Badger and Steinberg, but not for the other Named Executive Officers. In accordance with the Committee's desire to further link pay to performance and emphasize long-term shareholder value creation, the Committee allotted the increase only to those executives' long-term equity incentive awards granted at the beginning of fiscal year 2016.
Base Salary. For fiscal year 2016, salary comprised 26% of total target compensation for our CEO and between 33% and 50% for our other Named Executive Officers. Base salaries did not change from fiscal year 2015 to 2016 because the Compensation Committee believed the base salaries set in fiscal year 2015 to be still aligned with the Committee's philosophy and goals.
Annual Incentives. For fiscal year 2016, annual goals were set at the beginning of the fiscal year. The discussion below provides details regarding fiscal year 2016 annual incentive performance metrics, levels, and payouts for the Named Executive Officers.
Annual Incentive Levels. For Dennedy, Seebeck, Badger and Steinberg, fiscal year 2016 target annual incentives were set as a percentage of salary. Target annual incentives for fiscal year 2016 were set at 88% of salary for Mr. Dennedy, 60% of salary for Mr. Steinberg and 50% of salary for the other Named Executive Officers, substantially the same as the prior two fiscal years. Annual incentives comprised 23% of total target compensation for Mr. Dennedy, and between 20% and 25% for our other Named Executive Officers.
Performance Metrics for Dennedy, Seebeck, Badger and Steinberg. For all Named Executive Officers other than Mr. Walker, fiscal year 2016 performance metrics consisted of a revenue target and an adjusted EBITDA target. Each Named Executive Officer's annual incentive was weighted 60% on achievement of the revenue target and 40% on achievement of the adjusted EBITDA target. The Compensation Committee set financial performance metrics for fiscal year 2016 annual incentives to require target level improvements over fiscal year 2015 results for revenue and adjusted EBITDA. The target level for revenue was set at a $2.5 million, or 2.4%, improvement over fiscal 2015 results; and the target level for adjusted EBITDA was set at a $3.1 million, or 158%, improvement over fiscal 2015 results, reflecting the amount that the Compensation Committee believed could be reasonably achieved given the Company's operating plan and the costs associated with the Company's on-going investment in its next generation products and the Company's strategy of increasing revenue from its subscription services products. Adjusted EBITDA, a non-GAAP financial measure, is calculated as income before income taxes, interest expense (net of interest income), depreciation and amortization (including amortization of developed technology), and excluding charges relating to (i) legal settlements, (ii) restructuring, severance, and other charges, (iii) asset write-offs and other fair value adjustments, (iv) share-based compensation, and (v) other non-operating (income) expense.. The Company believes adjusted EBITDA is a profitability measure and a key driver of value, focusing on sales, product mix, margins, and expense management. Adjusted EBITDA was selected as an annual goal component given the desire to balance sales and margins, as both are manageable by our Named Executive Officers.
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Performance percentages for payouts (with proportionate payouts between the target and maximum achievement levels) were based on varying levels of achievement of fiscal year 2016 budgeted results, as described below. Payouts were capped at 150% of target incentives.
| | | | |
| Payout (% of target incentive) | | Payout (% of target incentive) | | Payout (% of target incentive) |
| | | | | | | |
| | | | | | | |
The Compensation Committee believed that the plan involved performance that was moderately difficult at the threshold level, difficult at the 100% target level, given continuing transformation of the business and competition and pricing pressure in the market, and significantly difficult at the maximum level, requiring meaningful improvement over fiscal year 2015 results for revenue and adjusted EBITDA, in each case relative to future expectations at the time the levels were set. Threshold levels were considered as the achievement necessary to successfully execute a minimum level of the operating plan.
Additional detail about threshold and maximum incentives are disclosed in the Grants of Plan-Based Awards for Fiscal Year 2016 table.
Fiscal Year 2016 Payouts. Our operating results for fiscal year 2016 outperformed our plan. Total net revenue increased by 16% from $103.5 million in fiscal year 2015 to $120.4 million in fiscal year 2016, and EBITDA increased 258% from $1.2 million in fiscal year 2015 to $4.3 million in fiscal year 2016.
| (1) | Adjusted EBITDA is a non-GAAP measure. A reconciliation of net loss, a GAAP measure, for fiscal year 2016 to adjusted EBITDA is as follows: |
| | |
| | |
| | |
Income tax expense (benefit) | | |
| | |
Depreciation of fixed assets | | |
Amortization of intangibles | | |
Amortization of developed technology | | |
Interest (income) expense | | |
| | |
Share-based compensation expense | | |
Restructuring, severance and other charges | | |
Asset write-offs and other fair value adjustments | | |
Other non-operating (income) expense | | |
| | |
| | |
| (a) | Adjusted EBITDA is defined as income before income taxes, interest expense (net of interest income), depreciation and amortization (including amortization of developed technology), and excluding charges relating to i) legal settlements, ii) restructuring, severance, and other charges, iii) asset write-offs and other fair value adjustments, iv) share-based compensation, and v) other non-operating (income) expense. |
| (b) | EBITDA is defined as net income before income taxes, interest expense, depreciation and amortization. |
As a result, our Named Executive Officers earned 138% of their target annual incentives related to financial targets for fiscal year 2016.
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The chart below set forth the fiscal year 2016 annual incentive opportunity for each Named Executive and the actual annual incentive awards earned and paid based on the Compensation Committee's review of the achievement of the performance measures.
As previously discussed, at the end of the fiscal year, the Compensation Committee re-assessed Mr. Dennedy's total compensation for fiscal year 2016 and deemed that the total compensation that would have been earned under his compensation package exceeded what the Committee believed to be market compensation for his position. As a result, the Committee used its discretion to reduce Mr. Dennedy's annual incentive award to 100% of his target incentive amount, from the 138% of target that would have been earned based on the Company's financial performance.
Performance Metrics for Walker. Mr. Walker's fiscal year 2016 annual incentives were set by Mr. Dennedy at the beginning of the year and consisted of (i) commissions earned for achieving gross margin quotas for bookings (i.e., dollar value of gross margin for sales booked), for which his target incentive was $150,000, (ii) incentives earned for achieving specific customer and product transaction bookings (i.e., number of sales transactions booked), for which his target incentive was $75,000, and (iii) a bonus of $50,000 earned upon attaining 100% of his assigned bookings dollar amount quota for the year. Mr. Dennedy set the target bookings levels at those he believed necessary for the Company to successfully execute the operating plan. Other than the $50,000 bonus to be earned upon attaining 100% of assigned target, which was a flat amount, there was no floor or ceiling on the amount that Mr. Walker could earn with respect to his annual incentives.
Mr. Walker substantially outperformed his bookings targets for fiscal year 2016. Mr. Walker earned (i) 154% of commissions for achieving gross margin quotas, (ii) 121% of his incentives for achieving specific customer and product transaction booking targets, and (iii) the $50,000 bonus for achieving 100% of his assigned bookings dollar amount quota. On a blended basis, Mr. Walker earned 135% of his target annual incentives based on achievement against his performance plan. At the end of the fiscal year, due to Mr. Walker's significant contribution to the Company's outperforming its operating plan, Mr, Dennedy approved payment to Mr. Walker of 138% of his target annual incentives so that his annual incentive payout would match that of the other Named Executive Officers.
Long-Term Incentives. As with the annual incentives, the Compensation Committee approved fiscal year 2016 long-term incentive ("LTI") awards at the beginning of year when the outcome for the fiscal year was substantially uncertain. LTI awards to Named Executive Officers consisted of stock-settled appreciation rights ("SSARs") and restricted shares, both with three-year vesting schedules, pursuant to the Company's shareholder-approved 2011 Stock Incentive Plan. The Compensation Committee considered various LTI award alternatives. While annual incentives targeted specific performance goals, the focus on LTI awards was to link compensation directly to shareholder gains. SSARs provided the direct link between compensation and shareholder gains in a less dilutive manner than with stock options, and the three-year vesting schedule also enhances retention. Restricted shares also tie compensation to shareholder gains and highly bolster retention over the vesting period. As in prior years, LTI awards were granted 50% as restricted stock and 50% as SSARs for each Named Executive Officer.
LTI awards comprised 52% of total target compensation for Mr. Dennedy to directly link a significant portion of his pay, when combined with his annual incentive, to performance and comprised between 25% and 48% for our other Named Executive Officers. In setting LTI awards for the Named Executive Officers other than the CEO, the Compensation Committee received input and recommendations from our CEO regarding each Named Executive Officer's relative ability to influence results. The competitive market assessment provided by Pearl Meyers & Partners indicated that fiscal year 2014 total compensation was below the market median for Messrs. Badger and Steinberg and Ms. Seebeck. As a result, target levels of LTI were increased over the prior year for Messrs. Badger and Steinberg and Ms. Seebeck in order to better align their total compensation with the market median and to further link pay to performance and emphasize long-term shareholder value creation, as described above.
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The Compensation Committee set the annual 2016 LTI awards for each Named Executive Officer as follows:
| Name | Percent of Salary (%) | Total LTI Value ($) | SSARs Granted (#) | Restricted Shares Granted (#) |
| James H. Dennedy | 200 | 824,000 | 105,844 | 45,175 |
| Janine K. Seebeck | 93 | 237,150 | 30,462 | 13,001 |
| Kyle C. Badger | 85 | 221,000 | 28,387 | 12,116 |
| Larry Steinberg | 145 | 380,625 | 48,891 | 20,867 |
All SSARs and restricted shares vest in one-third increments on March 31, 2016, 2017 and 2018. The SSARs were granted at an exercise price of $9.12 (the closing price of the common shares on the grant date), have a seven-year term, and are settled in common shares upon exercise.
Additional Compensation – Executive Benefits. We provide executive benefits to our Named Executive Officers including additional life and long-term disability insurance plans. From time to time, Named Executive Officers also may participate in supplier sponsored events. Executive benefits are further described in the Summary Compensation Table. We believe these benefits enhance the competitiveness of our overall executive compensation package. We have, however, limited executive benefits offered to reduce compensation costs. Additionally, welfare benefits offered to our Named Executive Officers are the same level of benefits offered to all Company employees, except that we pay for the cost of physicals to promote the health and well-being of our executives.
Employment Agreements and Change of Control
The material termination and change of control provisions of various agreements are summarized below for each Named Executive Officer and are covered in more detail in the Termination and Change of Control table and accompanying discussion.
Employment Agreements. In fiscal year 2015, all of the Named Executive Officers other than Mr. Walker entered into employment agreements with the Company with substantially the same terms. Mr. Walker entered into a substantially similar employment agreement in connection with his promotion in January 2016. All of the authorizationemployment agreements, including Mr. Walker's, have terms expiring July 21, 2017. Under the employment agreements, upon termination without cause, we must pay severance equal to one year's salary and target annual incentive and a lump sum amount equal to the executive's total premium for one year of COBRA continuation coverage under the Company's health benefit. If the executive's position is changed such that his or her responsibilities are substantially lessened (a "change in position"), the executive may terminate his or her employment if the Company fails to materially cure such condition within 30 days following notice of such condition by the executive, and the termination will be deemed to be a termination without cause and the executive is entitled to his or her severance benefits. None of the Named Executive Officers with employment agreements is entitled to excise tax gross-up payments. In consideration of the severance benefits, each employment agreement contains a 12-month post-termination non-solicitation provision, an indefinite confidentiality provision, and a 12-month post-termination non-compete provision. In the event that any of these Named Executive Officers are terminated without cause or for a change of position in the 24 months following a change of control of the Company, the Named Executive Officer is entitled to severance pay equal to two year's salary and target annual incentive and a lump sum amount equal to the executive's total premium for one year of COBRA continuation coverage under the Company's health benefit.
Our Compensation Committee believes that the terms of these employment agreements enhance our ability to retain our executives and contain severance costs by providing reasonable severance benefits competitive with market practice. Severance costs are contained by limiting pay to one year in the absence of a “control share acquisition”change of control, limiting personal benefits, not providing accelerated vesting for awards under the Ohio Control Share Acquisition Statute.
OTHER MATTERSagreements, and narrowly defining a voluntary termination that triggers severance benefits. Severance payments in the event of a change of control are subject to a double trigger such that severance benefits are provided only upon a combination of a change of control and a qualified termination. Additionally, the Company benefits greatly from the non-competition, non-disclosure, and non-solicitation clauses contained in the employment agreements.
Other29
Accelerated Vesting. None of the employment agreements discussed above provide for accelerated vesting of equity. Under our 2011 Stock Incentive Plan (and the 2016 Plan, if approved by shareholders at the Annual Meeting), vesting is accelerated upon the actual occurrence of a change of control for all SSARs and restricted shares (including performance shares). The Compensation Committee believed that during a change of control situation, a stable business environment is in the shareholders' best interests, and accelerated vesting provisions provide stability. The accelerated vesting provisions are applicable to all employees who receive equity awards, not just executive management.
The long-term incentive awards granted for fiscal year 2016 are subject to a holding period of one year following a change of control. Under this provision, all SSARs and restricted shares granted for fiscal year 2016 accelerate upon the actual occurrence of a change of control but remain subject to restrictions on exercise and transfer until the earlier of one year after the change of control or the executive's termination of employment without cause. The Compensation Committee believed that this further restriction during a change of control situation further promotes a stable business environment and is in the shareholders' best interests.
Additional Compensation Policies
Clawback – Recoupment of Bonuses, Incentives, and Gains. Under the Company's "clawback" policy, if the board of directors determines that our financial statements are restated due directly or indirectly to fraud, ethical misconduct, intentional misconduct, or a breach of fiduciary duty by one or more executive officers or vice presidents, then the board of directors will have the sole discretion to cancel any stock-based awards granted and to take such action, as permitted by law, as it deems necessary to recover all or a portion of any bonus or incentive compensation paid and recoup any gains realized in respect of equity-based awards, provided recoveries cannot extend back more than three years. Additionally, under Section 304 of the Sarbanes-Oxley Act, if we are required to restate our financial statements due to material noncompliance with any financial reporting requirements as a result of misconduct, our CEO and CFO must reimburse us for any bonus or other incentive-based or equity-based compensation received during the 12 months following the first public issuance of the non-complying document, and any profits realized from the sale of our securities during those 12 months.
Stock Ownership Guidelines. To underscore the importance of strong alignment between the interests of management and shareholders, the board of directors approved stock ownership guidelines for directors and executives, with our CEO having the highest ownership requirement. Director and executive compensation is designed to provide a significant opportunity to tie individual rewards to long-term Company performance. The objective of our stock ownership guidelines is to support this overall philosophy of alignment and to send a positive message to our shareholders, customers, suppliers, and employees of our commitment to shareholder value. Each director and executive officer is expected to maintain minimum share ownership of either: (i) the number of shares with a value based on a multiple of base salary or director annual retainer listed below, or (ii) the number of shares listed below:
| Title | Multiple of Director
Annual Retainer and
Executive Base Salary | Number of Shares |
| 2 Years | 4 Years | 2 Years | 4 Years |
| Director | 3x | 6x | 15,000 | | 45,000 | |
| CEO | 2.5x | 5x | 125,000 | | 250,000 | |
| Senior Vice President | 0.5x | 2x | 15,000 | | 75,000 | |
| LTIP Participants | — | 0.5x | 2,500 | | 15,000 | |
Stock ownership that is included toward attainment of the guidelines includes (i) shares held of record or beneficially owned, either directly or indirectly; (ii) shares acquired upon exercise of stock options or SSARs; (iii) vested restricted or deferred shares; (iv) phantom or deferred share units held in a deferred compensation plan; and (v) shares
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or deferred shares acquired by dividend reinvestment. Directors and executives are expected to attain the specified target ownership levels within both two and four years from the later of the effective date of this policy or becoming a director or an executive, and remain at or above that level until retirement. Annually, the board of directors reviews progress toward achieving these ownership levels. Director and executives who have not attained the specified ownership guidelines will be required to hold 75% of shares acquired upon exercise of stock options and SSARs or vesting of performance or restricted shares until they meet their target ownership level. If ownership guidelines are not met within two and four years, our Compensation Committee has the right to pay an executive's annual incentives in shares until ownership guidelines are achieved.
Stock Retention Policy. Under the Company's stock retention policy, directors and executive officers are required to hold shares of Company stock for at least one year after such shares vest in the case of performance or restricted shares, or one year after exercise in the case of stock options or SSARs, or until the earlier date of their termination of service as a director or executive officer. The holding period policy does not apply in instances of a "change in control," as defined in the 2011 Stock Incentive Plan and 2016 Stock Incentive Plan.
Impact of Tax and Accounting Considerations. In general, the Compensation Committee considers the various tax and accounting implications of the pay mechanisms used to provide pay to our Named Executive Officers, including the accounting cost associated with long-term incentive grants, when determining compensation. Section 162(m) of the Internal Revenue Code generally prohibits any publicly held corporation from taking a federal income tax deduction for pay to the chief executive officer and the three other highest compensated executive officers (other than the Control Share Acquisitionchief financial officer) in excess of $1 million in any taxable year. Exceptions are made for certain qualified performance-based pay. It is the Compensation Committee's objective to maximize the effectiveness of our executive pay plans in this regard. The pay instruments used, including salaries, annual incentives, and adjournment proposals,equity, are tax deductible to the extent that they are performance-based or less than $1 million for such Named Executive Officer in a given year. However, the Compensation Committee retains discretion to pay compensation that is not tax deductible in situations where it believes such compensation is appropriate.
COMPENSATION COMMITTEE REPORT
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis required by Item 402(b) of Regulation S-K with the Company's management. Based on that review and discussion, the Compensation Committee recommended to the board of directors that the Compensation Discussion and Analysis be included the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2016 and the Proxy Statement for its 2016 Annual Meeting of Shareholders.
The Compensation Committee of the Board of Directors
Melvin Keating, Chairman
Michael A. Kaufman
Keith M. Kolerus
John Mutch
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EXECUTIVE COMPENSATION
Summary Compensation Table
The following table and related notes provide information regarding fiscal year 2016 compensation for our Named Executive Officers, including our CEO and CFO and the other three most highly compensated executive officers whose total compensation exceeded $100,000 for fiscal year 2016.
Summary Compensation Table for Fiscal Year 2016
| Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(2) | Non-Equity Incentive Plan Compen-sation ($)(3) | Non- qualified Deferred Compen- sation Earnings ($) | All Other Compen- sation ($)(4) | Total ($) |
James H. Dennedy President and Chief Executive Officer | FY16 | 412,000 | | — | | 411,996 | | 411,999 | | 360,500 | | — | | 30,071 | | 1,626,566 | |
| FY15 | 410,154 | | — | | 1,087,491 | | 411,995 | | — | | — | | 33,919 | | 1,943,559 | |
| FY14 | 400,000 | | — | | 399,998 | | 400,129 | | 447,278 | | — | | 32,760 | | 1,680,038 | |
| | | | | | | | | | |
Janine K. Seebeck Senior Vice President, Chief Financial Officer and Treasurer | FY16 | 255,000 | | — | | 118,569 | | 118,574 | | 176,053 | | — | | 10,074 | | 678,270 | |
| FY15 | 252,692 | | — | | 507,291 | | 101,997 | | — | | — | | 11,533 | | 873,513 | |
| FY14 | 218,490 | | 25,000 | | 59,995 | | 60,015 | | 153,352 | | — | | 11,505 | | 528,347 | |
| | | | | | | | | | | | | | | | | | |
Kyle C. Badger Senior Vice President, General Counsel and Secretary | FY16 | 260,000 | | — | | 110,498 | | 110,497 | | 179,505 | | — | | 11,425 | | 671,925 | |
| FY15 | 260,000 | | — | | 441,747 | | 103,997 | | — | | — | | 12,497 | | 818,241 | |
| FY14 | 258,462 | | 25,000 | | 90,003 | | 90,027 | | 148,066 | | — | | 12,091 | | 623,619 | |
| | | | | | | | | | |
Larry Steinberg Senior Vice President, Chief Technology Officer | FY16 | 262,500 | | — | | 190,307 | | 190,309 | | 217,477 | | — | | 10,686 | | 871,279 | |
| FY15 | 260,577 | | — | | 643,470 | | 170,623 | | — | | — | | 14,250 | | 1,088,920 | |
| FY14 | 246,154 | | — | | 149,996 | | 105,052 | | 169,345 | | — | | 10,969 | | 726,468 | |
| | | | | | | | | | |
Jimmie D. Walker, Jr. Senior Vice President, Global Revenue | FY16 | 205,577 | | 380,787 | | 268,746 | | 42,860 | | — | | — | | — | | 897,970 | |
| | | | | | | | | | |
| (1) | For Ms. Seebeck and Mr. Badger, FY14 amounts consist of discretionary bonuses related to the RSG transaction. For Mr. Walker, FY16 amount consists of sales commissions and annual incentives associated with sales goals. |
| (2) | Stock Awards include grants of restricted shares and performance shares. Option Awards include SSAR grants. Amounts disclosed do not represent the economic value received by the Named Executive Officers. The value, if any, recognized upon the exercise of a SSAR will depend upon the market price of the shares on the date the SSAR is exercised. The value, if any, recognized for restricted and performance shares will depend upon the market price of the shares upon vesting. In accordance with SEC rules, the values for restricted and performance shares and SSARs are equal to the aggregate grant date fair value for each award computed in accordance with FASB ASC Topic 718. The values for restricted and performance shares are based on the closing price on the grant date. The values for SSARs are based on the Black-Scholes option pricing model. A discussion of the assumptions used in determining these valuations is set forth in Note 14 of the Notes to Consolidated Financial Statements of the Company's 2016 Annual Report. For Stock Awards, the amounts shown represent grants of restricted shares to each Named Executive Officer as part of the executive's annual long-term equity grant, and for 2015 includes grants of restricted shares to improve retention of key management, including the Named Executive Officers. |
| (3) | Amounts represent annual incentive payments received for 2016, 2015 and 2014 based on pre-set incentive goals established at the beginning of each fiscal year and tied to the Company's financial, strategic, and operational goals. |
| (4) | All other compensation includes the following compensation, calculated based on the aggregate incremental cost to the Company of the benefits noted: |
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All Other Compensation for Fiscal Year 2016
| Name | 401(k) Company Match ($) | Executive Life Insurance ($) | Relocation ($)(a) | All Other ($)(b) | Total ($) | |
| J. Dennedy | 9,300 | | 2,038 | | 16,800 | | 1,933 | | 30,071 | |
| J. Seebeck | 8,941 | | 459 | | — | | 674 | | 10,074 | |
| K. Badger | 9,141 | | 1,164 | | — | | 1,121 | | 11,425 | |
| L. Steinberg | 8,290 | | 1,239 | | — | | 1,156 | | 10,686 | |
(a)Mr. Dennedy was reimbursed for temporary housing near the Company's corporate offices.
(b) Consists of executive long-term disability coverage.
Grants of Plan-Based Awards
The following table and related notes summarize grants of equity and non-equity incentive compensation awards to our Named Executive Officers for fiscal year 2016. All equity awards were made under the Company's 2011 Stock Incentive Plan.
Grants of Plan-Based Awards for Fiscal Year 2016
| Name | Grant Date | Estimated Future Payouts
Under Non-Equity Incentive
Plan Awards ($)(1) | Estimated Future Payouts
Under Equity Incentive
Plan Awards ($) | All Other
Stock
Awards:
Number
of Shares
of Stock
(#)(2) | All Other Option Awards: Number of Securities Underlying Options (#)(3) | Exercise
or Base
Price of Option Awards ($/share) | Grant Date Fair Value of Stock and Option Awards ($)(4) |
Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) |
| James H. Dennedy | 6/2/2015 | 180,250 | | 360,500 | 540,750 | | | | | | | | |
| | 6/2/2015 | | | | | | | | | 45,175 | | | 9.12 |
| | 6/2/2015 | | | | | | | | | | 105,844 | 9.12 | 3.89 |
| | | | | | | | | | | | |
| Janine K. Seebeck | 6/2/2015 | 63,750 | 127,500 | 191,250 | | | | | | | | |
| | 6/2/2015 | | | | | | | 13,001 | | | | 9.12 |
| | 6/2/2015 | | | | | | | | 30,462 | | 9.12 | 3.89 |
| | | | | | | | | | | | | |
| Kyle C. Badger | 6/2/2015 | 65,000 | 130,000 | 195,000 | | | | | | | |
| 6/2/2015 | | | | | | | 12,116 | | | 9.12 |
| 6/2/2015 | | | | | | | | | | 28,387 | 9.12 | 3.89 |
| | | | | | | | | | | | |
| Larry Steinberg | 6/2/2015 | 78,750 | | 157,500 | 236,250 | | | | | | | | | |
| | 6/2/2015 | | | | | | | | | | | 20,867 | | | 9.12 |
| | 6/2/2015 | | | | | | | | | | | | 48,891 | 9.12 | 3.89 |
| | | | | | | | | | | | |
| Jimmie D. Walker, Jr. | 8/11/2015 | | | | | | | | | | | 10,666 | 9.60 | 4.02 |
| | 1/5/2016 | | | | | | | | | | | 25,000 | | | 12.33 |
| (1) | Amounts shown in the columns under Estimated Future Payouts Under Non-Equity Incentive Plan Awards represent fiscal year 2016 annual threshold, target, and maximum cash-based annual incentives granted under the annual incentive plan. Total threshold, target, and maximum payouts were conditioned on achievement of weighted goals based on revenue and adjusted operating income for each Named Executive Officer. Fiscal year 2016 payouts for each Named Executive Officer pursuant to these awards are shown in the Summary Compensation Table above in the column titled Non-Equity Incentive Plan Compensation. Further explanation of potential and actual payouts by component is set forth in the Compensation Discussion and Analysis – Annual Incentives. |
| (2) | The share amounts shown represent grants of restricted shares to each Named Executive Officer as part of the executive's annual long-term equity grant. |
| (3) | The share amounts represent SSARs granted at the fair market value of the shares on the grant date as fiscal year 2016 long-term incentive awards. The SSARs are exercisable in thirds beginning on March 31, 2016. All SSARs have a seven-year term. |
| (4) | The dollar amount shown for each equity grant represents the grant date fair value of the SSARs and restricted shares, calculated in accordance with FASB ASC Topic 718. The actual value, if any, recognized upon the exercise of a SSAR or vesting of restricted shares will depend upon the market price of the shares on the date the SSAR is exercised or restricted shares vest. |
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Outstanding Equity Awards
The following table and related notes summarize the outstanding equity awards held by the Named Executive Officers as of March 31, 2016.
Outstanding Equity Awards at 2016 Fiscal Year-End
| Name | Grant
Date | Option Awards | Stock Awards |
Number of Securities Underlying
Unexercised Options (#) | Option
Exercise
Price ($) | Option Expiration Date | Number of
Shares of Stock
That Have
Not
Vested (#)(2) | Market
Value of
Shares of
Stock That
Have Not
Vested ($)(3) |
| Exercisable | Unexercisable (1) |
| James H. Dennedy | 6/12/2012 | 78,305 | | | 7.46 | | 6/12/2019 | | | |
| | 6/4/2013 | 50,188 | | | 12.38 | | 6/4/2020 | | | |
| | 6/3/2014 | 38,042 | | 19,021 (a) | 14.43 | | 6/3/2021 | 9,517 (a) | 97,169 | |
| | 7/18/2014 | | | | | | | 47,500 (a) | 484,975 | |
| | 6/2/2015 | 35,281 | | 70,563 (a) | 9.12 | | 6/2/2022 | 30,117 (a) | 307,495 | |
| | | | | | | | |
| Janine K. Seebeck | 11/7/2011 | 5,152 | | | 8.31 | | 11/7/2018 | | | |
| | 6/12/2012 | 5,721 | | | 7.49 | | 6/12/2019 | | | |
| | 6/4/2013 | 5,019 | | | 12.38 | | 6/4/2020 | | | |
| | 8/7/2013 | 2,715 | | | 11.40 | | 8/7/2020 | | | |
| | 6/3/2014 | 9,418 | | 4,709 (b) | 14.43 | | 6/3/2021 | 2,356 (b) | 24,055 | |
| | 7/18/2014 | | | | | | | 28,500 (b) | 290,985 | |
| | 6/2/2015 | 10,154 | | 20,308 (b) | 9.12 | | 6/2/2022 | 8,668 (b) | 88,500 | |
| | | | | | | | | | | |
| Kyle C. Badger | 10/31/2011 | 11,194 | | | 8.49 | | 10/31/2018 | | | |
| | 6/12/2012 | 12,886 | | | 7.46 | | 6/12/2019 | | | |
| | 6/4/2013 | 11,292 | | | 12.38 | | 6/4/2020 | | | |
| | 6/3/2014 | 9,602 | | 4,802 (c) | 14.43 | | 6/3/2021 | 2,402 (c) | 24,524 | |
| | 7/18/2014 | | | | | | | 23,750 (c) | 242,488 | |
| | 6/2/2015 | 9,445 | | 18,892 (c) | 9.12 | | 6/2/2022 | 8,078 (c) | 82,476 | |
| | | | | | | | |
| Larry Steinberg | 5/9/2012 | 17,513 | | | 8.64 | | 5/9/2019 | | | |
| | 6/4/2013 | 18,821 | | | 12.38 | | 6/4/2020 | | | |
| | 6/3/2014 | 15,754 | | 7,878 (d) | 14.43 | | 6/3/2021 | 3.941 (d) | 40,238 | |
| | 7/18/2014 | | | | | | | 33,250 (d) | 339,483 | |
| | 6/2/2015 | 16,297 | | 32,594 (d) | 9.12 | | 6/2/2022 | 13,912 (d) | 142,042 | |
| | | | | | | | | | | |
| Jimmie D. Walker, Jr. | 3/30/2015 | | | | | | | 1,785 (e) | 26,015 | |
| | 8/11/2015 | 3,555 | | 7,105 (e) | 9.60 | | 8/11/2022 | | | |
| | 1/5/2016 | | | | | | | 25,000 (e) | 255,250 | |
| (1) | As of March 31, 2016, the vesting schedule for the time-vested SSARs was as follows: |
| (a) | 54,302 on March 31, 2017 and 35,281 on March 31, 2018 |
| (b) | 14,863 on March 31, 2017 and 10,154 on March 31, 2018 |
| (c) | 14,248 on March 31, 2017 and 9,446 on March 31, 2018 |
| (d) | 24,175 on March 31, 2017 and 16,297 on March 31, 2018 |
| (e) | 3,555 on March 31, 2017 and 3,556 on March 31, 2018 |
| (2) | As of March 31 2016, the vesting schedule for the time-vested stock awards was as follows: |
| (a) | 2,500 on July 31, 2016; 24,575 on March 31, 2017; 45,000 on July 31, 2017; 15,059 on March 31, 2018 |
| (b) | 1,500 on July 31, 2016; 6,690 on March 31, 2017; 27,000 on July 31, 2017; 4,334 on March 31, 2018 |
| (c) | 1,250 on July 31, 2016; 6,441 on March 31, 2017; 22,500 on July 31, 2017; 4,039 on March 31, 2018 |
| (d) | 1,750 on July 31, 2016; 10,897 on March 31, 2017; 31,500 on July 31, 2017; 6,956 on March 31, 2018 |
| (e) | 1,250 on January 5, 2017; 1,785 on March 31, 2017; 1,250 on January 5, 2018; 22,500 on January 5, 2019. |
| (3) | Calculated based on the closing price of the shares on March 31, 2016 of $10.21 per share. |
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Option Exercises and Stock Vested
The following table and related notes summarize the exercise of stock options and/or SSARs and the vesting of other stock awards by the Named Executive Officers during fiscal year 2015.
Option Exercises and Stock Vested for Fiscal Year 2016
| Name | Option Awards | Stock Awards |
Number of Shares
Acquired on Exercise (#) | Value Realized on
Exercise
($) | Number of Shares
Acquired on Vesting (#) | Value
Realized on
Vesting ($)(1) |
| James H. Dennedy | — | | — | | 37,845 | | 382,047 | |
| Janine K. Seebeck | — | | — | | 9,851 | | 97,969 | |
| Kyle C. Badger | — | | — | | 10,114 | | 101,089 | |
| Larry Steinberg | — | | — | | 17,572 | | 174,822 | |
| Jimmie D. Walker, Jr. | — | | — | | 509 | | 5,197 | |
| (1) | The value realized on vesting of stock awards is determined by multiplying the number of shares underlying the stock awards by the closing price of the shares on the vesting date of the awards. |
Termination and Change of Control
The following table and discussion summarize certain information related to the total potential payments which would have been made to the Named Executive Officers in the event of termination of their employment with the Company, including in the event of a change of control, effective March 31, 2016, the last business day of fiscal year 2016.
Employment Agreements. The Named Executive Officers are each a party to an employment agreement with the Company. Under the employment agreements, if we terminate any of the Named Executive Officers' employment without cause, he or she will receive severance equal to one year's salary and target annual incentive, and a lump sum amount equal to the executive's total premium for one year of COBRA continuation coverage under the Company's health benefit. If the Company changes the Named Executive Officer's position such that his or her compensation or responsibilities are substantially lessened, and the Company fails to cure such situation within 30 days after notice, he or she may terminate his or her employment and will receive his or her severance benefits. In the event that any of the Named Executive Officers are terminated without cause or for a change of position in the 24 months following a change of control of the Company, the Named Executive Officer is entitled to severance pay equal to two year's salary and target annual incentive and a lump sum amount equal to the executive's total premium for one year of COBRA continuation coverage under the Company's health benefit. Following a termination of employment for any reason the executive is prohibited for a one-year period following termination from being employed by, owning, operating, controlling, or being connected with any business that competes with the Company. Each executive's agreement also contains an indefinite non-disclosure provision for the protection of the Company's confidential information and one-year non-solicitation and non-compete provisions.
35
Termination and Change of Control
| Voluntary Termination or Termination for Cause ($)(1) | James Dennedy | Janine Seebeck | Kyle Badger | Larry Steinberg | Jimmie Walker, Jr. |
| Base Salary and Incentive | — | — | — | — | — |
| Accelerated Vesting | — | — | — | — | — |
| Termination without Cause or by Employee for Change in Position ($)(1) | | | | | |
| Base Salary and Incentive | 773,000 | | 382,500 | 390,000 | | 420,000 | | 500,000 | |
| Health Insurance (2) | 10,357 | | 1,031 | 10,357 | | 11,557 | | 10,357 | |
| Accelerated Vesting | — | | — | — | | — | | — | |
| | _______ | _______ | _______ | _______ | _______ |
| Total | 783,357 | | 383,531 | 400,357 | | 431,557 | | 510,357 | |
Change of Control ($)(3) | | | | | |
| Base Salary and Incentive | 1,546,000 | | 765,000 | 780,000 | | 840,000 | | 1,000,000 | |
| Health Insurance | 10,357 | | 1,031 | 10,357 | | 11,557 | | 10,357 | |
| Accelerated Vesting/SSARs (3) | 76,914 | | 22,135 | 20,592 | | 35,527 | | 4,334 | |
| Accelerated Vesting/Stock (3) | 889,638 | | 415,476 | 349,488 | | 521,762 | | 273,475 | |
| | _______ | _______ | _______ | _______ | _______ |
| Total | 2,522,909 | | 1,191,706 | 1,160,437 | | 1,408,846 | | 1,288,166 | |
| Death or Disability ($)(4) | | | | | |
| Accelerated Vesting/SSARs (3) | 76,914 | | 22,135 | 20,592 | | 35,527 | | 4,334 | |
| Accelerated Vesting/Stock (3) | 889,638 | | 415,476 | 349,488 | | 521,762 | | 521,762 | |
| | _______ | _______ | _______ | _______ | _______ |
| Total | 966,552 | | 425,676 | 370,081 | | 557,289 | | 277,809 | |
| (1) | For the Named Executive Officers, "cause" is defined as (i) breach of employment agreement or any other duty to the Company, (ii) dishonesty, fraud, or failure to abide by the published ethical standards, conflicts of interest, or material breach of Company policy, (iii) conviction of a felony crime or crime involving misappropriation of money or other Company property, (iv) misconduct, malfeasance, or insubordination, or (v) gross failure to perform (not including failure to achieve quantitative targets). A "change in position" is the substantial lessening of compensation or responsibilities. After a change in position, the executive has 30 days to notify the Company of his or her termination of employment, and the Company has 30 days to cure. A "voluntary termination" includes death, disability, or legal incompetence. |
| (2) | Health Insurance consists of health care and dental care benefits. The amount reflects 12 months of benefits for the Named Executive Officers that participate in the Company's plans. These benefits have been calculated based on actual cost to us for fiscal year 2016. |
| (3) | Severance payments in the event of a change of control are subject to a double trigger such that severance benefits are provided only upon a combination of a change of control and a qualified termination. SSARs and restricted shares vest upon a change of control. For SSARs (except as qualified below) the value of accelerated vesting is calculated using the closing price of $10.21 per share on March 31, 2016 less the exercise price per share for the total number of SSARs accelerated. The value of restricted shares upon vesting reflects that same $10.21 closing price. Values represent potential vesting under a hypothetical change of control situation on March 31, 2016. |
| (4) | All SSARs and restricted shares vest upon death or disability. |
EQUITY COMPENSATION PLAN INFORMATION
The following table provides certain information with respect to all of the Company's equity compensation plans in effect as of March 31, 2016.
36
| Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans |
| Equity compensation plans approved by shareholders (2000 Stock Option Plan for Outside Directors and 2000, 2006, and 2011 Stock Incentive Plans) | 1,339,365 | 12.29 | 1,016,888 |
| | | | |
| Equity compensation plans not approved by shareholders | — | — | — |
Total | 1,339,365 | 12.29 | 1,016,888 |
PROPOSAL 4
ADVISORY VOTE REGARDING EXECUTIVE COMPENSATION
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 ("Dodd-Frank Act") and SEC rules require us to allow our shareholders to vote, on a non-binding, advisory basis, on whether to approve the compensation of our Named Executive Officers as disclosed in this Proxy Statement, in accordance with the SEC's compensation disclosure rules. As described more fully in our CD&A section of this Proxy Statement, our compensation programs applicable to our Named Executive Officers are designed to retain executives who can significantly contribute to our success, reward the achievement of specific annual and long-term goals and strategic objectives, and tie a significant portion of compensation to the long-term performance of our shares to align executive pay and shareholders' interests. The Compensation Committee continually reviews the compensation programs for our Named Executive Officers to ensure the alignment of our executive compensation structure with our shareholders' interests and market practices. As a result of this review, the Compensation Committee:
| · | Maintained base salaries and target annual incentives for fiscal year 2016 at the same levels as fiscal year 2015; |
| · | Focused annual incentives on improvements over fiscal year 2015 revenue results; |
| · | Used its discretion to reduce the CEO's fiscal year 2016 annual incentive payout to maintain CEO total compensation in line with market compensation; and |
| · | Structured long-term incentives to reward increases in shareholder value. |
We are asking shareholders to approve our Named Executive Officers' compensation as described in this Proxy Statement. Currently, we ask shareholders to vote on such compensation annually. This vote is not intended to address any specific item of compensation, but rather the overall compensation, and the philosophy, objectives, and structure applicable to such compensation. This advisory vote is not binding on the Company, the Compensation Committee, or our board of directors; however, we value the opinions of our shareholders and to the extent there is any significant vote against this proposal, we will consider our shareholders' concerns and evaluate whether any actions are necessary to address those concerns. Accordingly, we are asking our shareholders to vote "FOR" the following resolution at the Annual Meeting:
"RESOLVED, that the Company's shareholders approve, on an advisory basis, the compensation of the Named Executive Officers, as disclosed in the Company's Proxy Statement for the 2016 Annual Meeting of Shareholders pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis and the discussion under Executive Compensation, including the 2016 compensation tables and the related disclosure and narratives to those tables."
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" PROPOSAL 4. PROXY CARDS RECEIVED BY THE COMPANY WILL BE VOTED "FOR" PROPOSAL 4 UNLESS THE SHAREHOLDER SPECIFIES OTHERWISE ON THE PROXY CARD.
37
AUDIT COMMITTEE REPORT
The Audit Committee oversees the Company's financial reporting process on behalf of the board of directors. The Audit Committee's activities are governed by a written charter adopted by the board of directors, the Amended and Restated Audit Committee Charter, which is available at the Company's website www.agilysys.com. The Audit Committee currently consists of three directors, all of whom are independent in accordance with the rules of the NASDAQ Stock Market, Section 10A(m) of the Securities Exchange Act of 1934, and the rules and regulations of the SEC. The Board has determined that Directors Donald Colvin and John Mutch each qualify as an "audit committee financial expert" as defined by the SEC.
Management has the primary responsibility for the Company's financial statements and the reporting process, including the system of internal controls over financial reporting. Grant Thornton LLP ("Grant"), the Company's independent registered public accounting firm, audits the annual financial statements prepared by management and expresses an opinion on whether those financial statements conform with United States generally accepted accounting principles, and also audits the internal controls over financial reporting and management's assessment of those controls. The Audit Committee hires the Company's independent registered public accounting firm and monitors these processes.
In carrying out its responsibilities, the Audit Committee has reviewed and has discussed with the Company's management the Company's 2016 audited financial statements. Management represented to the Audit Committee that the Company's financial statements were prepared in accordance with United States generally accepted accounting principles. In addition, the Audit Committee discussed with the Company's financial management and independent registered public accounting firm the overall scope and plans for the audit. The Audit Committee also met with the independent registered public accounting firm, with and without management present, to discuss the results of the audit, their evaluation of the Company's internal controls over financial reporting, including both the design and usefulness of such internal controls, and the overall quality of the Company's financial reporting.
The Audit Committee has discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 16, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board.
The Audit Committee has also received annual written disclosures from Grant regarding their independence from the Company and its management as required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent accountant's communications with the Audit Committee concerning independence, has discussed with the independent registered public accounting firm their independence, and has considered the compatibility of non-audit services with the registered public accounting firm's independence.
Based on the review and discussions referred to above, the Audit Committee recommended to the board of directors that the Company's 2016 audited financial statements be included in the Company's 2016 Annual Report on Form 10-K for the fiscal year ended March 31, 2016.
Submitted by the Audit Committee of the Board of Directors as of June 8, 2016
Donald Colvin, Chairman
Jerry Jones
John Mutch
38
PROPOSAL 5
RATIFICATION OF APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
By NASDAQ and SEC rules, appointment of the Company's independent registered public accounting firm ("Independent Accountant") is the direct responsibility of the Audit Committee, and the Audit Committee has appointed Grant Thornton LLP as our Independent Accountant for the fiscal year ending March 31, 2016.
Shareholder ratification of the selection of Grant Thornton as our Independent Accountant is not required by our Amended Code of Regulations or otherwise; however, the board of directors has determined to seek shareholder ratification of that selection to provide shareholders an avenue to express their views on this important matter. If our shareholders fail to ratify the selection, the Audit Committee will seek to understand the reasons for the vote against ratification and will take those views into account in this and future appointments. Even if the selection is ratified, the Audit Committee in its discretion may direct the appointment of a different Independent Accountant at any time during the year if it is determined that such a change would be in the best interests of the Company and our shareholders.
THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" THE RATIFICATION OF GRANT THORNTON AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM. PROXY CARDS RECEIVED BY THE COMPANY WILL BE VOTED "FOR" PROPOSAL 5 UNLESS THE SHAREHOLDER SPECIFIES OTHERWISE ON THE PROXY CARD.
The Audit Committee reviewed the fees of Grant Thornton LLP, our Independent Accountant for fiscal year 2016, and of PricewaterhouseCoopers LLP ("PwC"), our Independent Accountant for fiscal year 2015. Fees for services rendered by Grant Thornton and PwC for fiscal year 2016 and by PwC for fiscal year 2015 were:
Fiscal
Year | Audit Fees ($) | Audit-Related Fees ($) | Tax Fees ($) | All Other Fees ($) |
| 2016 (Grant Thornton) | 680,281 | | — | | — | | — | |
| 2016 (PwC) | 211,400 | | — | | — | | 2,700 | |
| 2015 (PwC) | 676,798 | | — | | — | | 2,700 | |
"Audit Fees" consist of fees billed for professional services provided for the annual audit of our financial statements, annual audit of internal control over financial reporting, review of the interim financial statements included in quarterly reports, and services that are normally provided in connection with statutory and regulatory filings. "Audit-Related Fees" generally include fees for employee benefits plan audits, business acquisitions, and accounting consultations. "Tax Fees" include tax compliance and tax advice services. "All Other Fees" generally relate to services provided in connection with non-audit acquisition activities.
Representatives of Grant Thornton are expected to be present at the Annual Meeting. They will have an opportunity to make a statement if they so desire and will be available to respond to appropriate questions. Representatives of PwC are not expected to be present at the Annual Meeting.
The Audit Committee adopted an Audit and Non-Audit Services Pre-Approval Policy (the "Policy") to ensure compliance with SEC and other rules and regulations relating to auditor independence, with the goal of safeguarding the continued independence of our Independent Accountant. The Policy sets forth the procedures and conditions pursuant to which audit, review, and attest services and non-audit services to be provided to the Company by our Independent Accountant may be pre-approved. The Audit Committee is required to pre-approve the audit and non-audit services performed by our Independent Accountant to assure that the provision of such services does not impair independence. Unless a type of service to be provided has received pre-approval as set forth in the Policy, it will require separate pre-approval by the Audit Committee
39
before commencement of the engagement. Any proposed service that has received pre-approval but which will exceed pre-approved cost limits will require separate pre-approval by the Audit Committee. All audit, non-audit, and tax services were pre-approved by the Audit Committee during fiscal years 2016 and 2015.
Change of Independent Registered Public Accounting Firm.
On August 12, 2015, we dismissed PwC. The decision to dismiss PwC was approved by the Audit Committee.
PwC's reports on our consolidated financial statements for the fiscal years ended March 31, 2015 and March 31, 2014 did not contain any adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principle.
During our fiscal years ended March 31, 2015 and March 31, 2014 and through August 12, 2015, there were no disagreements with PwC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedures, which disagreements, if not resolved to PwC's satisfaction, would have caused PwC to make reference to the subject matter of the disagreements in their reports on our consolidated financial statements for such years. In addition, during our fiscal years ended March 31, 2015 and March 31, 2014 and through August 12, 2015, there were no "reportable events" as that term is defined in Item 304(a)(1)(v) of Regulation S‑K.
We provided PwC with a copy of the above prior to its filing with the SEC and requested that PwC furnish us with a letter addressed to the SEC stating whether or not it agrees with the above statements. PwC provided the requested letter, which was also filed with the SEC.
On August 20, 2015, we engaged Grant Thornton as our new independent registered public accounting firm for the fiscal year ending March 31, 2016. The engagement of Grant Thornton was approved by the Audit Committee. In connection with our engagement of Grant Thornton, including during the fiscal years ended March 31, 2015 and 2014 and through August 20, 2015, neither the Company, nor anyone on its behalf, consulted Grant Thornton regarding either (i) the application of accounting principles to a specific transaction, either completed or proposed, or the type of audit opinion that might be rendered on our financial statements or (ii) any matter that was the subject of a "disagreement" (as that term is defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) or a "reportable event" (as that term is defined in Item 304(a)(1)(v) of Regulation S-K).
RELATED PERSON TRANSACTIONS
All related person transactions with the Company require the prior approval or ratification by our Audit Committee. The board of directors adopted Related Person Transaction Procedures to formalize the procedures by which our Audit Committee reviews and approves or ratifies related person transactions. The procedures set forth the scope of transactions covered, the process for reporting such transactions, and the review process. Covered transactions include any transaction, arrangement, or relationship with the Company in which any director, executive officer, or other related person has a direct or indirect material interest, except for business travel and expense payments, share ownership, and executive compensation approved by the board of directors. Transactions are reportable to the Company's General Counsel, who will oversee the initial review of the reported transaction and notify the Audit Committee of transactions within the scope of the procedures, and the Audit Committee will determine whether to approve or ratify the transaction. Through our Nominating and Corporate Governance Committee, we make a formal yearly inquiry of all of our executive officers and directors for purposes of disclosure of related person transactions, and any such newly revealed related person transactions are conveyed to the Audit Committee. All officers and directors are charged with updating this information with our internal legal counsel.
HOUSEHOLDING
Some banks, brokers and other nominee record holders may be participating in the practice of "householding." This means that only one copy of either the notice of Internet availability of the proxy statement or of this proxy statement and Annual Report on Form 10-K may have been sent to multiple shareholders sharing an address unless the shareholders provide contrary
40
instructions. We will promptly deliver a separate copy of these documents to you if you call or write us at: Agilysys, Inc., 425 Walnut Street, Suite 1800, Cincinnati, Ohio 45202, Attention: Secretary; telephone (770) 810-7800.
If you want to receive separate copies of our proxy statements and annual reports to shareholders in the future, or if you are receiving multiple copies and would like to receive only one copy for your household, you should contact your bank, broker or other nominee record holder, or you may contact us at the above address or telephone number.
OTHER MATTERS
The Board is not aware of any matter to come before the Annual Meeting of Shareholders other than those mentioned in the accompanying Notice. If other matters properly come before the Annual Meeting, the persons named in the accompanying proxy card intend, to the extent permitted by law, to vote using their best judgment on such matters.
SHAREHOLDER PROPOSALS
Shareholders who, in accordance with SEC Rule 14a-8, wish to present proposals for inclusion in the proxy materials to be submitted atdistributed in connection with the Special Meeting and no other business is expected to be brought before the Special Meeting. However, if any other matter properly comes before the Special Meeting, the named proxies will vote all proxies granted to them in their sole discretion.
INFORMATION ABOUT AGILYSYS
Agilysys was organized as an Ohio corporation in 1963. While originally focused on electronic components distribution, Agilysys grew to become a leading provider of innovative IT solutions to corporate and public-sector customers, with special expertise in select markets, including retail and hospitality. Agilysys uses technology — including hardware, software and services — to help customers resolve their most complicated IT needs. Agilysys possesses expertise in enterprise architecture and high availability, infrastructure optimization, storage and resource management, and business continuity, and provides industry-specific software, services and expertise to the retail and hospitality markets. Headquartered in Cleveland, Ohio, Agilysys operates extensively throughout North America, with additional sales offices in the United Kingdom and Asia. Agilysys’ principal executive offices are located at: 28925 Fountain Parkway, Solon, Ohio 44139, and its telephone number is(440) 519-8700.
INFORMATION ABOUT MAK CAPITAL
MAK Capital Fund LP is a private investment fund. MAK GP LLC is the general partner of MAK Capital Fund LP. MAK Capital One LLC serves as the investment manager of MAK Capital Fund LP and other funds and accounts. Michael A. Kaufman is the managing member and controlling person of each of MAK GP LLC and MAK Capital One LLC. R. Andrew Cueva is a Managing Director at MAK Capital One LLC and a member of the Agilysys
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Board of Directors. The principal address of each of MAK Capital Fund LP, MAK GP LLC, MAK Capital One LLC, Michael A. Kaufman and R. Andrew Cueva is 590 Madison Avenue, 9th Floor, New York, New York 10022.
Paloma International L.P. is a private investment fund, and it owns its shares of Agilysys Common Stock through its subsidiary, Sunrise Partners Limited Partnership. Trust Asset Management LLP is the general partner with investment discretion over the securities held by Paloma International L.P. S. Donald Sussman is the controlling person of Paloma International L.P. and Trust Asset Management LLP. MAK Capital One LLC is the investment manager with respect to Paloma International L.P.’s Common Shares.
Please see footnote 19 to the Beneficial Ownership of Common Shares table above for information about MAK Capital and its affiliates with respect to its Common Shares.
SUBMISSION OF SHAREHOLDER PROPOSALS
Any shareholder that intends to present a proposal at the 20102016 Annual Meeting of Shareholders must ensure the proposal issubmit their proposals so that they are received by theour Secretary at Agilysys’ principal executive officesour at our Alpharetta office, located at 1000 Windward Concourse, Suite 250, Alpharetta, Georgia 30005, no later than February 26, 2010, for inclusion in the Proxy Statement and formclose of Proxy relating to that Annual Meeting.business on [ ], 2017. Each proposal submitted should be accompanied by the name and address of the shareholder submitting the proposal and the number of Common Sharescommon shares owned. If the proponent is not a shareholder of record, proof of beneficial ownership should also be submitted. All proposals must be a proper subject for action and comply with the proxy rules of the SEC.
In order for a shareholder to bring a matter properly before the 2016 Annual Meeting present (other than a matter brought pursuant to SEC Rule 14a-8), the shareholder must comply with the requirements set forth in our Regulations, including: (i) be a shareholder of record at the time notice of the matter is given and at the time of the meeting, (ii) be entitled to vote at the meeting, and (iii) have given timely written notice of the matter to the Secretary. A shareholder's notice of a matter the shareholder wishes to present at the 2016 Annual Meeting (other than a matter brought pursuant to SEC Rule 14a-8), must be received by our Secretary at our Alpharetta office, located at 1000 Windward Concourse, Suite 250, Alpharetta, Georgia 30005, no earlier than May 18, 2017, and no later than June 17, 2017.
Any shareholder entitled to vote at the Annual Meeting on September 15, 2016 may make a request in writing and we will mail, at no charge, a copy of our 2016 Annual Report, including the financial statements and schedules required to be filed with the SEC pursuant to Rule 13a-1 under the Exchange Act, for the most recent fiscal year. Written requests should be directed to Agilysys, may use its discretion in voting proxies with respect to shareholder proposals not includedInc., Attn: Investor Relations, 1000 Windward Concourse, Suite 250, Alpharetta, Georgia 30005.
Please sign and return your proxy card promptly, or vote via the Internet or telephone. For your convenience a return envelope is enclosed requiring no additional postage if mailed in the United States.
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CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION
This Proxy Statement and other publicly available documents, including the documents incorporated herein and therein by reference, contain, and our officers and representatives may from time to time make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as: "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. These statements are not guarantees of future performance and involve risks, uncertainties, and assumptions that are difficult to predict. These statements are based on management's current expectations, intentions, or beliefs and are subject to a number of factors, assumptions, and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. Factors that could cause or contribute to such differences or that might otherwise impact the business include the risk factors set forth in Item 1A of our Annual Report for the fiscal year ended March 31, 2010, unless it receives notice2016. We undertake no obligation to update any such factor or to publicly announce the results of any revisions to any forward-looking statements contained herein whether as a result of new information, future events, or otherwise.
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Appendix A
Amendments to Agilysys, Inc. Amended Code of Regulations
If Proposal 1 of the proxy statement is approved, Article II, Section 1 of the Company's Amended Code of Regulations would be amended as follows (with strikethroughs reflecting language to be deleted and bolded language reflecting additions):
Number, Classification, Term of Office
Section 1. (a) The Board of Directors shall be divided into two classes to be known as Class A and Class B. The number of Directors in each class may be fixed or changed by the Board of Directors of the Company; provided, however, that the total number of Directors shall not be less than three (3) or more than nine (9) members, and no class shall consist of less than three (3) directors. One class ofAll Directors shall be elected each year and the Directors in each class shall hold office for a term of two yearsone year and until their respective successors are elected and qualified. In case of any increase in the authorized number of Directors of any class, any additional Directors provided for and elected to such class shall hold office for a term which shall coincide with the full term or the remainder of the term, as the case may be, of such proposalsclass.
If Proposal 1 of the proxy statement is approved, Article II, Section 6 of the Company's Amended Code of Regulations would be amended as follows (with strikethroughs reflecting language to be deleted):
Removal
Section 6. All the Directors or all the Directors of a particular class or any individual Director may be removed from office, with or without cause, by the vote of the holders of two-thirds of the voting power entitled to elect Directors in place of those to be removed; provided, that unless all the Directors or all the Directors of a particular class are to be removed, no Director shall be removed without cause if the number of shares voted against his removal would be sufficient to elect at least one Director if cumulatively voted at an election of all the Directors, or all the Directors of a particular class, as the case may be.
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Appendix B
AGILYSYS, INC.
2016 STOCK INCENTIVE PLAN
1.Purposes.
The purposes of the Plan are to provide long-term incentives to those persons with significant responsibility for the success and growth of the Company, to align the interests of such persons with those of the Company's shareholders, to assist the Company in recruiting, retaining and motivating employees, directors and consultants on a competitive basis and to link compensation to performance.
2.Definitions.
For purposes of the Plan, the following capitalized terms shall have the meanings specified below:
(a) "Award" means a grant of Stock Options, Stock Appreciation Rights, Restricted Shares or Restricted Share Units, or any or all of them, to a Participant.
(b) "Award Agreement" means an agreement, either in written or electronic format, between the Company and a Participant setting forth the terms and conditions of an Award granted to the Participant.
(c) "Board" means the Board of Directors of the Company.
(d) "Cause" means with respect to any Participant, unless otherwise provided in the applicable Award Agreement, (i) the Participant's conviction or misappropriation of money or other property or conviction of a felony, or a guilty plea or plea of nolo contendere by Participant with respect to a felony, (ii) conduct by the Participant that is in competition with the Company, conduct by a Participant that breaches the Participant's duty of loyalty to the Company or a Participant's willful misconduct, any of which materially injures the Company, (iii) a willful and material breach by the Participant of his or her obligations under any agreement entered into between the Participant and the Company that materially injures the Company, or (iv) the Participant's failure to substantially perform his or her duties with the Company (other than by reason of the Participant's Disability). For Participants subject to Section 16 of the Exchange
Act, the determination of whether any conduct, action or failure to act constitutes "Cause" shall be made by the Committee in its sole discretion.
(e) "Change in Control" means the occurrence of any of the following events:
(i)all or substantially all of the assets of the Company are sold or transferred to another corporation or entity, or the Company is merged, consolidated or reorganized with or into another corporation or entity, with the result that upon conclusion of the transaction less than 51% of the outstanding securities entitled to vote generally in the election of directors ("Voting Stock") or other capital interests of the acquiring corporation or entity are owned, directly or indirectly, by the holders of Voting Stock of the Company generally prior to May 12, 2010.
the transaction;
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION(ii)there is a report filed on Scheduled 13D or Scheduled 14D-1, each as promulgated pursuant to the Exchange Act, disclosing that any person (as the term "person" is used in Section 13(d)(3) or Section 14(d)(2) of the Exchange Act), excluding the Company and any employee benefit plan of the Company, including the trustee of any such plan, has become the beneficial owner (as the term "beneficial owner" is defined under Rule 13d-3) of securities representing 33- 1/3% or more of the combined voting power of the then-outstanding Voting Stock of the Company; or
(iii)the individuals who, at the beginning of any period of two consecutive calendar years, constituted the directors of the Company cease for any reason to constitute at least a majority thereof unless either (A) the nomination for election by the Company's shareholders of each new director of the Company was approved by a vote of at
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least two-thirds of the directors of the Company still in office who were directors of the Company at the beginning of any such period; or (B) to the extent adverse tax consequences under Section 409A of the Code would not be triggered, this clause (iii) is waived by a vote of at least two-thirds of the directors of the Company still in office who were directors of the Company at the beginning of any such period.
Notwithstanding anything herein to the contrary, an event described above shall be considered a Change in Control hereunder only if it also constitutes a "change in control event" under Section 409A of the Code, to the extent necessary to avoid the adverse tax consequences thereunder with respect to any Award subject to Section 409A of the Code.
(f) "Code" means the Internal Revenue Code of 1986, as amended, and any rules, regulations or guidance promulgated thereunder. Any reference to the Code or a section thereof shall also refer to any successor Code or section.
(g) "Committee" means a committee appointed by the Board consisting of at least three members of the Board, all meeting the definitions of "outside director" set forth in Code Section 162(m), "independent director" set forth in The Nasdaq Stock Market rules, and "non-employee director" set forth in Rule 16b-3 of the Exchange Act, or any successor definitions adopted for a similar purpose by the Internal Revenue Service, any national securities exchange on which the Common Shares are listed or the Securities and Exchange Commission.
(h) "Common Share" or "Common Shares" means one or more of the common shares, without par value, of the Company.
(i) "Company" means Agilysys, Inc., a corporation organized under the laws of the State of Ohio, its subsidiaries, divisions and affiliated businesses.
(j) "Date of Grant" means the date on which the Committee authorizes the grant of an Award or such later date as may constitute forward-looking information withinbe specified by the Committee in such authorization.
(k) "Disability" means a Participant's physical or mental incapacity resulting from personal injury, disease, illness or other condition which (i) prevents him or her from performing his or her duties for the Company, as determined by the Committee or its designee, and (ii) results in his or her termination of employment or service with the Company. The Committee may substitute a different definition for the term "Disability" in its discretion as it deems appropriate.
(l) "Effective Date" has the meaning ofset forth in Section 27A of the Securities Act of 1933, Section 21E of13(a).
(m) "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the Private Securities Reform Act of 1995. Forward-looking information speaks only asany rules, regulations, schedules or guidance promulgated thereunder. Any reference to the date of this Proxy Statement and may be identified by use of words such as “may,” “will,” “believes,” “anticipates,” “plans,” “expects,” “estimates,” “projects,” “targets,” “forecasts,” “continues,” “seeks,” or the negative of those terms or similar expressions. Many important factors could cause actual results to be materially different from those in forward-looking information including, without limitation, competitive factors, disruption of supplies, changes in market conditions, pending or future claims or litigation, or technology advances. No assurances can be provided as to the outcome of cost reductions, business strategies, future financial results, unanticipated downturns to our relationships with customers, unanticipated difficulties integrating acquisitions, new laws and government regulations, interest rate changes, unanticipated deterioration in economic and financial conditions in the United States and around the world or the consequences if the shareholders either approve or fail to approve the proposed Control Share Acquisition by MAK Capital announced on November 20, 2009. Agilysys does not undertake to update or revise any forward-looking information even if events make it clear that any projected results, actions, or impact, express or implied, will not be realized.
Other potential risks and uncertainties that may cause actual results to be materially different from those in forward-looking information are described in the company’s Annual Report onForm 10-K filed within the SEC, under Item 1A, “Risk Factors.” Copies are available from the SEC or the Agilysys website.
OTHER INFORMATION
The information concerning MAK Capital and the Control Share Acquisition contained herein has been taken from, or is based upon, publicly available documents on file with the SEC and other publicly available information. Although Agilysys has no knowledge that would indicate that statements relating to MAK Capital and the Control Share Acquisition contained in this Proxy Statement in reliance upon publicly available information are inaccurate or incomplete, it has not had access to the books and records of MAK Capital, was not involved in the preparation of such information and statements and is not in a position to verify any such information or statements. Accordingly, Agilysys does not take any responsibility for the accuracy or completeness of such information or for any failure by MAK Capital to disclose events that may have occurred and may affect the significance or accuracy of any such information.
Your vote is important! Please timely complete, sign, date and return the enclosed WHITE proxy card and certification.
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Exhibit A
ACQUIRING PERSON STATEMENT
PURSUANT TO SECTION 1701.831 OF THE OHIO REVISED CODE
DELIVERED TO
AGILYSYS, INC.
(Name of Issuing Public Corporation)
28925 FOUNTAIN PARKWAY, SOLON, OHIO 44139
(Address of Principal Executive Offices)
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ITEM 1. | IDENTITY OF ACQUIRING PERSON. |
This Acquiring Person Statement is being delivered to Agilysys, Inc., an Ohio corporation (the “Corporation”), at its principal executive offices, which are located at 28925 Fountain Parkway, Solon, Ohio 44139, by MAK Capital Fund LP, a Bermuda limited partnership (the “MAK Capital Fund”), and Paloma International L.P., a Delaware limited partnership (“Paloma” and, together with MAK Capital Fund, the “Acquiring Person”).
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ITEM 2. | DELIVERY OF ACQUIRING PERSON STATEMENT. |
This Acquiring Person Statement is being delivered pursuant to Section 1701.831 of the Ohio Revised Code. The Acquiring Person requests that the Corporation hold the special shareholders meeting in connection with this Acquiring Person Statement no sooner than thirty (30) days after the Corporation’s receipt of this Acquiring Person Statement.
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ITEM 3. | OWNERSHIP OF SHARES BY ACQUIRING PERSON. |
As of the date hereof, the Acquiring Person directly and indirectly collectively owns 4,418,447 shares of the Corporation’s common stock, without par value (“Shares”) representing approximately 19.18% of the total issued and outstanding Shares (based upon the 23,031,119 Shares stated by the Corporation in the Corporation’s Quarterly Report onForm 10-Q for the period ended September 30, 2009 to be issued and outstanding as of October 31, 2009). Of the 4,418,447 Shares owned by the Acquiring Person: (a) 2,646,161 Shares are owned by MAK Capital Fund, representing approximately 11.49% of the total issued and outstanding Shares, and (b) 1,772,286 Shares are owned by Paloma through its subsidiary, Sunrise Partners Limited Partnership, a Delaware limited partnership (“Sunrise”), representing approximately 7.70% of the total issued and outstanding Shares.
In addition to the beneficial ownership described above (i) MAK GP LLC (“MAK GP”), the general partner of MAK Capital Fund, may be deemed to beneficially own the Shares held by MAK Capital Fund, (ii) Trust Asset Management LLP, the general partner with investment discretion over the securities held by Paloma and Sunrise (“TAM”), may be deemed to beneficially own the Shares held by Paloma through Sunrise, (iii) S. Donald Sussman, the controlling person of Paloma, Sunrise and TAM, may be deemed to beneficially own the Shares held by Paloma through Sunrise, (iv) MAK Capital One LLC, the investment manager of MAK Capital Fund and Paloma with respect to the Shares, may be deemed to have beneficial ownership of the Shares held by each of them, and (v) Michael A. Kaufman, as the controlling person of MAK Capital One LLC, MAK GP and MAK Capital Fund, may be deemed to be the beneficial owner of the shares of Common Stock held by MAK Capital Fund and Paloma. R. Andrew Cueva, an employee of MAK Capital One LLC and a director of the Corporation, does not own directly or indirectly, beneficially or of record, any securities of Agilysys. Each of MAK GP, TAM, MAK Capital One LLC, Mr. Kaufman, Mr. Sussman and Mr. Cueva disclaims beneficial ownership of the Shares held by MAK Capital Fund and Paloma except to the extent of his or its pecuniary interest therein.
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ITEM 4. | RANGE OF VOTING POWER. |
Collectively, the Acquiring Person proposes to acquire an additional number of Shares that, when added to the Acquiring Person’s current Share ownership, would equal one-fifth or more (but less than one-third) of the Corporation’s voting power in the election of directors, as described in Section 1701.01(Z)(1)(a) of the Ohio Revised Code (the “Additional Shares”). The Acquiring Person does not intend, either alone or in concert with any other person, to exercise control of the Corporation by proposing to acquire that number of Shares described in this Acquiring Person Statement.
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ITEM 5. | TERMS OF PROPOSED CONTROL SHARE ACQUISITION. |
The Acquiring Person proposes to acquire the Additional Shares in one or more transactions to occur during the360-day period following the date the Corporation’s shareholders authorize the proposed acquisition. The Acquiring Person proposes to acquire the Additional Shares (i) in one or more purchases in the open market, (ii) in one or more block trades, (iii) through an intermediary, (iv) pursuant to a tender offer,and/or (v) by any other legally permitted method.
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ITEM 6. | REPRESENTATIONS OF LEGALITY; FINANCIAL CAPACITY. |
The Acquiring Person hereby represents that the control share acquisition proposed herein, if consummated, will not be contrary to law. This representation is based on the facts that the Acquiring Person is delivering this Acquiring Person Statement in accordance with Section 1701.831 of the Ohio Revised Code, and the Acquiring Person intends to make the proposed acquisition only if it is duly authorized by the shareholders of the Corporation at the annualExchange Act or a special meeting ofsection thereof shall also refer to any successor Exchange Act or section.
(n) "Exercise Price" means the Corporation’s shareholders. The Acquiring Person hereby represents that it has the financial capacity to purchase the Additional Shares contemplated by this Acquiring Person Statement. This representation is based on an assumed purchase price of $8.13 pera Common Share covered by a Stock Option or SAR, as applicable.
(o) "Fair Market Value" on any date means the closing price of the Corporation’sCommon Shares as reported on The Nasdaq Stock Market or, if applicable, any other national securities exchange on which the Common Shares are principally traded, or, if there were no sales of Common Shares on November 19, 2009.such date, then on the immediately preceding date on which there were any sales of Common Shares. If the Common Shares cease to be traded on a national securities exchange, the Fair Market Value shall be determined pursuant to a reasonable valuation method prescribed by the Committee. In the case of an ISO (or Tandem SAR), Fair Market Value shall be determined by the Committee in accordance with Code Section 422. For Awards intended to be exempt from Code Section 409A, Fair Market Value shall be determined by the Committee in accordance with Code Section 409A.
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(p) "Full-Value Award" means Restricted Shares or Restricted Share Units.
(q) "ISO" means an incentive Stock Option satisfying the undersignedrequirements of Code Section 422 and designated as an ISO by the Committee.
(r) "Non-Employee Director" means a member of the Board who is not an employee of the Company.
(s) "NQSO" means a non-qualified Stock Option that does not satisfy the requirements of Code Section 422 or that is not designated as an ISO by the Committee.
(t) "Participant" means a person eligible to receive an Award under the Plan, as set forth in Section 4, and designated by the Committee to receive an Award subject to the conditions set forth in the Plan and any Award Agreement.
(u) "Performance-Based Exception" means the performance-based exception to the deductibility limitations of Code Section 162(m), as set forth in Code Section 162(m)(4)(C).
(v) "Performance Goals" means the goals established by the Committee, as described Section 6(d)(ii).
(w) "Performance Measures" means the criteria set out in Section 6(d)(iii) that may be used by the Committee as the basis for a Performance Goal.
(x) "Performance Period" means the period established by the Committee during which the achievement of Performance Goals is assessed in order to determine whether and to what extent an Award that is conditioned on attaining Performance Goals has executedbeen earned.
(y) "Plan" means the Agilysys, Inc. 2016 Stock Incentive Plan, as amended and restated.
(z) "Prior Plan" means the 2011 Stock Incentive Plan, as may be amended.
(aa) "Restricted Shares" means Common Shares that are subject to restrictions, as described in Section 6(c).
(bb) "Restricted Share Units" means a right, as described in Section 6(c), denominated in Common Shares to receive an amount, payable in either cash, Common Shares, Restricted Shares, or a combination thereof, equal to the value of a specified number of Common Shares.
(cc) "Restriction Period" means, with respect to any Full-Value Award, the period during which any risk of forfeiture or other restrictions set by the Committee, including performance restrictions, remain in effect until such time as they have lapsed under the terms and conditions of the Full-Value Award or as otherwise determined by the Committee, including the Performance Period for Full-Value Awards intended to qualify for the Performance-Based Exception.
(dd) "Retirement" means retirement with the Company at or after age 65 or at or after the later of age 55 and seven years of service.
(ee) "Securities Act" means the Securities Act of 1933, as amended, and any rules, regulations, schedules or guidance promulgated thereunder. Any reference to the Securities Act or a section thereof shall also refer to any successor Securities Act or section.
(ff) "Stock Appreciation Right" or "SAR" means the right, as described in Section 6(b), to receive a payment equal to the excess of the Fair Market Value of a Common Share on the date the SARs are exercised over the Exercise Price established for those SARs at the time of grant, multiplied by the number of Common Shares with respect to which the SARs are exercised.
(gg) "Stock Option" means the right, as described in Section 6(a), to purchase Common Shares at a specified price for a specified period of time. Stock Options include ISOs and NQSOs.
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(hh) "Tandem SAR" means a SAR granted in tandem with a Stock Option.
3.Administration of the Plan.
(a) Authority of Committee. The Plan shall be administered by the Committee. Unless otherwise determined by the Board, the Compensation Committee of the Board shall serve as the Committee. The Committee shall have all the powers vested in it by the terms of the Plan, such powers to include the sole and exclusive authority to (within the limitations described in the Plan):
(i)select Participants to be granted Awards under the Plan and grant Awards pursuant to the terms of the Plan;
(ii)determine the type, size and terms of the Awards to be granted to each Participant;
(iii)determine the time when Awards are to be granted and any conditions that must be satisfied before an Award is granted;
(iv)establish objectives and conditions for earning an Award;
(v)determine all other terms and conditions, not inconsistent with the terms of the Plan and any operative employment or other agreement, of any Award granted under the Plan, and determine the appropriate Award Agreement evidencing the Award;
(vi)determine whether conditions for earning an Award have been met, including any such determination required for compliance with Code Section 162(m);
(vii)modify or waive the terms and conditions of Awards granted under the Plan, not inconsistent with the terms of the Plan and any operative employment or other agreement, accelerate the vesting, exercise or payment of an Award or cancel or suspend an Award;
(viii)determine whether the amount or payment of an Award should be reduced or eliminated, and determine if, when and under what conditions payment of all or any part of any Award may be deferred;
(ix)determine the guidelines and/or procedures for the payment or exercise of Awards;
(x)determine whether an Award should qualify, regardless of its amount, as deductible in its entirety for federal income tax purposes, including whether any Awards granted to an employee should qualify for the Performance-Based Exception;
(xi)adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan;
(xii)construe, interpret, administer and implement the Plan, any Award Agreements or related documents and correct any defect, supply an omission or reconcile any inconsistency in or between the Plan, any Award Agreement or related documents; and
(xiii)make factual determinations with respect to the Plan and any Awards and otherwise supervise the administration of the Plan.
(b) Binding Authority. The Committee's interpretations of the Plan, and all actions taken and determinations made by the Committee pursuant to the powers vested in under the Plan, shall be conclusive and binding on all parties, including the Company, its shareholders and all Participants.
(c) Delegation of Authority. To the extent not prohibited by law or the rules of the national securities exchange on which the Company's Common Shares are listed, the Committee may allocate its authority hereunder to one or more of its members or delegate its authority hereunder to one or more Non-Employee Directors, except that no such allocation
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or delegation shall be permitted with respect to Awards intended to qualify for the Performance-Based Exception, and may grant authority to employees of the Company to execute documents on behalf of the Committee or to otherwise assist in the administration and operation of the Plan.
4.Eligibility.
Subject to the terms and conditions of the Plan, the Committee may select, from all eligible persons, Participants to whom Awards shall be granted under the Plan and shall determine the nature and amount of each Award. Eligible persons include any of the following individuals: (i) any officer or employee of the Company, (ii) any consultant (as defined in the General Instructions to the Form S-8 registration statement under the Securities Act) to the Company, and (iii) any Non-Employee Director. All Awards shall be evidenced by an Award Agreement, and Awards may be conditioned upon the Participant's execution of an Award Agreement.
5.Common Shares Subject to the Plan.
(a) Authorized Number of Common Shares. Unless otherwise authorized by the Company's shareholders and subject to this Acquiring Person StatementSection 5 and Section 8, the maximum aggregate number of Common Shares available for issuance under the Plan is 2,000,000, plus (i) the number of Common Shares that, on the Effective Date, are available to be granted under the Prior Plan but which are not then subject to outstanding awards under the Prior Plan, and (ii) the number of Common Shares subject to outstanding awards under the Prior Plan as of the 19th dayEffective Date which thereafter are forfeited, settled in cash or cancelled or expire. Upon the Effective Date, the Prior Plan will terminate; provided that all outstanding awards under the Prior Plan as of November, 2009.the Effective Date shall remain outstanding and shall be administered and settled in accordance with the provisions of the Prior Plan.
(i)The maximum number of Common Shares available for grant with respect to Full- Value Awards is 1,250,000.
(ii)Subject to Section 5(b), 2,000,000 of the Common Shares available for issuance under the Plan may be granted with respect to Incentive Stock Options.
(b) Share Counting. The following rules shall apply in determining the number of Common Shares available for grant under the Plan:
(i)Common Shares subject to any Award shall be counted against the maximum share limitation as one Common Share for every Common Share subject thereto.
(ii)To the extent that any Award is forfeited, cancelled, settled in cash, returned to the Company for failure to satisfy vesting requirements or other conditions of the Award or otherwise terminates without an issuance of Common Shares being made, the maximum share limitation shall be credited with one Common Share for each Common Share subject to such Award, and such number of credited Common Shares may again be made subject to Awards under the Plan.
(iii)Any Common Shares tendered by a Participant or withheld as full or partial payment of withholding or other taxes or as payment for the exercise or conversion price of an Award or repurchased by the Company with Stock Option proceeds shall not be added back to the number of Common Shares available for issuance under the Plan. Upon exercise of a SAR, the number of Common Shares subject to the Award that are being exercised shall be counted against the maximum aggregate number of Common Shares that may be issued under the Plan on the basis of one Common Share for every Common Share subject thereto, regardless of the actual number of Common Shares used to settle the SAR upon exercise.
(iv)Any Common Shares underlying Awards granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals who become employees of the Company as a result of a merger, consolidation, acquisition or other corporate transaction shall not, unless required by law or regulation, count against the reserve of available Common Shares under the Plan.
MAK CAPITAL FUND LPB-5
By: MAK GP LLC, general partner
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| By: | /s/ Michael A. Kaufman |
Michael A. Kaufman,(c) Award Limitations. Subject to the adjustment provisions of Section 8, the following limits shall apply with respect to Awards intended to quality for the Performance-Based Exception:
Managing Member
(i)The maximum aggregate number of Common Shares that may be subject to Stock Options or SARs granted in any calendar year to any one Participant shall be 800,000 Common Shares.
(ii)The maximum aggregate number of Common Shares that may be subject to Full- Value Awards granted in any calendar year to any one Participant shall be 400,000 Common Shares.
(d) Shares to be Delivered. Common Shares to be delivered by the Company under the Plan may consist in whole or in part of authorized but unissued shares or treasury shares.
6.Awards to Participants.
(a) Stock Options.
(i)Grants. Subject to the terms and conditions of the Plan, Stock Options may be granted to Participants, in such number and upon such terms and conditions as the Committee determines, and may consist of ISOs or NQSOs. Options may be granted alone or with Tandem SARs. With respect to Stock Options granted with Tandem SARs, the exercise of either such Stock Options or Tandem SARs will result in the simultaneous cancellation of the same number of Tandem SARs or Stock Options, as the case may be.
(ii)Exercise Price. The Exercise Price shall be equal to or, at the Committee's discretion, greater than the Fair Market Value on the date the Stock Option is granted, unless the Stock Option was granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals who became employees of the Company as a result of a merger, consolidation, acquisition or other corporate transaction, in which case the assumption or substitution shall be accomplished in a manner that permits the Stock Option to be exempt from Code Section 409A.
(iii)Term. The term of Stock Options shall be determined by the Committee in its sole discretion, but in no event shall the term exceed seven years from the Date of Grant.
(iv)ISO Limits. ISOs may be granted only to Participants who are employees of the Company (or of any parent or subsidiary corporation within the meaning of Code Section 424) on the Date of Grant, and may only be granted to an employee who, at the time the Stock Option is granted, does not own more than ten percent of the total combined voting power of all classes of stock of the Company (or of any parent or subsidiary corporation within the meaning of Code Section 424), unless (A) the Exercise Price is at least 110% percent of the Fair Market Value on the Date of Grant, and (B) the ISO is not exercisable after five years from the Date of Grant. The aggregate Fair Market Value of all Common Shares, determined at the time the ISOs are granted, with respect to which ISOs are exercisable by a Participant for the first time during any calendar year (under all plans of the Company) shall not exceed $100,000 or such other amount as may subsequently be specified by the Code. If such Fair Market Value exceeds the $100,000 limit, the ISOs exceeding the limit shall be treated as NQSOs, taking the Stock Options in the order each was granted. The terms of all ISOs shall be consistent with and contain or be deemed to contain all provisions required to qualify as an "incentive stock option" under Code Section 422.
(v)No Repricing. Subject to the adjustment provisions of Section 8, without the approval of the Company's shareholders, (A) the Exercise Price for any outstanding Stock Option may not be decreased after the Date of Grant, (B) no outstanding Stock Option may be surrendered to the Company as consideration for the grant of a new Stock Option with a lower Exercise Price, and (C) no other modifications to any outstanding Stock Option may be made that would be treated as a "repricing" under the then applicable rules, regulations or listing requirements adopted by the national securities exchange on which the Common Shares are listed.
(vi)Form of Payment. Vested Stock Options may be exercised in whole or in part, and the Exercise Price shall be paid to the Company at the time of exercise, subject to any applicable rules or regulations adopted by the Committee:
PALOMA INTERNATIONAL L.P.B-6
By: Paloma Partners Company L.L.C.,
general partner
| | |
| By: | /s/ Michael J. Berner |
Michael J. Berner,(A)to the extent permitted by applicable law, pursuant to cashless exercise procedures that are approved by the Committee;
Vice President
(B)through the tender of unrestricted Common Shares owned by the Participant (or by delivering a certification or attestation of ownership of such Common Shares) valued at their Fair Market Value on the date of exercise;
[Signature Page(C)in cash or its equivalent; or
(D)by any combination of (A), (B), and (C) above.
(vii)No Dividends or Shareholder Rights. No dividends or dividend equivalents may be paid on Stock Options. Except as otherwise provided herein, a Participant shall have no rights as a holder of Common Shares covered by a Stock Option unless and until such Common Shares have been registered to Acquiring Person Statement]
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Exhibit B
PRESUMPTIONS AND PROCEDURES FOR SPECIAL MEETING
To: Corporate Elections Services, Inspector of Election
From: Agilysys, Inc.
Date: December 7, 2009
| | |
| Re: | Special Meeting of Shareholders to be held on January 5, 2010 — Presumptions, Procedures, and Methods of Calculation for the Shareholder Votes to be taken under the Ohio Control Share Acquisition Statute |
1. A corporation’s officers and directors have the power as wellParticipant as the fiduciary obligationowner.
(b) Stock Appreciation Rights.
(i)Grants. Subject to establish rules to conduct fairthe terms and efficient shareholder meetings and elections that are consistent with Ohio law. Section 1701.50provisions of the Ohio Revised Code authorizes the directorsPlan, SARs may be granted to appoint inspectors of election,Participants, in such number and Agilysys has appointed Corporate Election Servicesupon such terms and conditions as the InspectorCommittee determines, and may be granted alone or as Tandem SARs. With respect to Tandem SARs, the exercise of Election (the “Inspector”)either such Stock Options or SARs will result in the simultaneous cancellation of the same number of Tandem SARs or Stock Options, as the case may be.
(ii)Exercise Price. The Exercise Price shall be equal to or, at the Committee's discretion, greater than Fair Market Value on the date the SAR is granted, unless the SAR was granted through the assumption of, or in substitution for, outstanding awards previously granted to individuals who became employees of the Company as a result of a merger, consolidation, acquisition or other corporate transaction involving the Company, in which case the assumption or substitution shall be accomplished in a manner that permits the SAR to be exempt from Code Section 409A.
(iii)Term. The term of a SAR shall be determined by the Committee in its sole discretion, but in no event shall the term exceed seven years from the Date of Grant; provided that, each SAR granted in tandem with a Stock Option shall terminate upon the termination or exercise of the related Stock Option.
(iv)No Repricing. The Board may, if it deems it appropriate, appoint a presiding inspector of election (the “Presiding Inspector”) to work with and oversee the Inspector. The matters set forth in this Memorandum have been developed by Agilysys in consultation with the Inspector in connection with its appointment as such by Agilysys.
2. At the Special Meeting, Agilysys shareholders will be asked to approve, pursuantSubject to the Ohio Control Share Acquisition Statute, a resolution authorizingadjustment provisions of Section 8, without the Control Share Acquisition proposed by MAK Capital. Authorizationapproval of the Company's shareholders, (A) the Exercise Price for any outstanding SAR may not be decreased after the Date of Grant, (B) no outstanding SAR may be surrendered to the Company as consideration for the control share acquisition requires: (a) the affirmative vote of the holdersgrant of a majoritynew SAR with a lower Exercise Price and, (C) no other modifications to any outstanding SAR may be made that would be treated as a "repricing" under the then applicable rules, regulations or listing requirements adopted by the national securities exchange on which the Common Shares are listed.
(v)Form of Payment. Vested SARs may be exercised in whole or in part, and the voting power entitled to vote in the election of Agilysys directors represented at the Special Meeting in person or by proxy (the “First Majority Approval”); and (b) the affirmative vote of the holdersCommittee may authorize payment of a majority of the voting power represented at the Special Meeting in person or by proxy, excluding any shares which are “Interested Shares,” as defined under the Ohio Control Share Acquisition Statute (the “Second Majority Approval”). Agilysys shareholders will also be asked to approve the adjournment of the Special Meeting, if an adjustment proposal is raised by Agilysys or MAK Capital at the Special Meeting. No other proposal or business is expected to be raised at the Special Meeting.
3. Agilysys will include a certification as to eligibility to vote,SAR in the form of Schedule A hereto (the “Certification of Eligibility”),cash, Common Shares valued at its Fair Market Value on the WHITE proxy card distributeddate of the exercise or a combination thereof, or by itany other method as the Committee may determine.
(vi)Tandem SARs. Tandem SARs may be exercised for all or part of the Common Shares subject to the related Stock Option upon the surrender of the right to exercise the equivalent portion of the related Stock Option. A Tandem SAR may be exercised only with respect to the Common Shares for which its related Stock Option is then exercisable. Notwithstanding any other provision of the Plan to the contrary, with respect to a Tandem SAR granted in connection with an ISO: (A) the Tandem SAR will expire no later than the expiration of the underlying ISO, (B) the value of the payout with respect to the Tandem SAR may be for no more than 100% of the excess of the Fair Market Value of the Common Shares subject to the underlying ISO at the time the Tandem SAR is exercised over the Exercise Price of the underlying ISO, and (C) the Tandem SAR may be exercised only when the Fair Market Value of the Common Shares subject to the ISO exceeds the Exercise Price of the ISO.
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(vii)No Dividends or Shareholder Rights. No dividends or dividend equivalents may be paid on SARs. Except as otherwise provided herein, a Participant shall have no rights as a holder of Common Shares covered by a SAR unless and until such Common Shares have been registered to the Participant as the owner.
(c) Restricted Shares and Restricted Share Units.
(i)Grants. Subject to the terms and provisions of the Plan, Restricted Shares and Restricted Share Units may be granted to Participants in such number and upon such terms and conditions as the Committee determines. Restricted Shares will be registered in the name of the Participant and deposited with the Company or its agent in certificated or book-entry form.
(ii)Restrictions. Restricted Shares or Restricted Share Units may be granted at no cost or at a purchase price determined by the Committee, which may be less than the Fair Market Value, but subject to such terms and conditions as the Committee determines, including, without limitation: forfeiture conditions, transfer restrictions, restrictions based upon the achievement of specific performance goals (Company-wide, divisional and/or individual), which may be based on one or more Performance Measure, time-based restrictions on vesting and/or restrictions under applicable federal or state securities laws. Subject to Sections 9 and 10, for Awards to employees, no Restricted Shares or Restricted Share Units conditioned upon the achievement of performance shall be based on a Restriction Period of less than one year, and any Restriction Period based solely on continued employment or service (time-based) shall be for a minimum of three years, subject to (A) pro rata or graded vesting prior to the expiration of such time-based Restriction Period, and (B) acceleration due to the Participant's death, Disability or Retirement, in each case as specified in the applicable Award Agreement; provided that the Restriction Period applicable to the first vesting date of an Award subject to pro rata or graded vesting (as referenced in (A) above) may be for less than one year, provided the first vesting date is no earlier than the fiscal year-end date of the fiscal year during which the Award was granted. To the extent the Restricted Shares or Restricted Share Units are intended to qualify for the Special Meeting. Agilysys has requested that MAK Capital include a conforming Certification of Eligibility on any proxy card distributed by MAK Capital forPerformance-Based Exception, the Special Meeting. Upon request, Agilysys will supply shareholders with a separate Certification of Eligibility form. Agilysys will request depositories, banks, brokerage houses, other institutions, nominees and fiduciaries holding Common Shares beneficially owned by other parties (each a “Nominee”) to include a conforming Certification of Eligibility on all materials distributed to such beneficial owners seeking instructions from the beneficial owners as to how to vote such Common Shares.
4. At the Special Meeting, the Inspector shall endeavor to determine whether the required quorum is present. Absent a definitive determination to that effect, the quorumapplicable restrictions shall be presumed to be present to allowbased on the businessachievement of Performance Goals over a Performance Period, as described in Section 6(d).
(iii)Transfer Restrictions. During the meeting to go forward, even though the final calculation to determine whether the required quorum is presentRestriction Period, Restricted Shares and Restricted Share Units may not be completedsold, assigned transferred or otherwise disposed of, or mortgaged, pledged or otherwise encumbered. In order to enforce the limitations imposed upon the Restricted Shares, the Committee may (A) cause a legend or legends to be placed on any certificates evidencing such Restricted Shares, and/or (B) cause "stop transfer" instructions to be issued, as it deems necessary or appropriate.
(iv)Dividends and Voting Rights. Unless otherwise determined by the Committee, during the Restriction Period, Participants who hold Restricted Shares shall have the right to receive dividends in cash or other property or other distribution or rights in respect of the Restricted Shares and shall have the right to vote the Restricted Shares as the record owners; provided that, unless otherwise determined by the Committee, any dividends or other property payable to a Participant during the Restriction Period shall be distributed to the Participant only if and when the restrictions imposed on the applicable Restricted Shares lapse. Unless otherwise determined by the Committee, during the Restriction Period, Participants who hold Restricted Shares Units shall be credited with dividend equivalents in respect of such Restricted Share Units; provided that, unless otherwise determined by the Committee, such dividend equivalents shall be distributed (without interest) to the Participant only if and when the restrictions imposed on the applicable Restricted Share Units lapse. Participants shall have no other rights as a shareholder with respect to Restricted Share Units. Notwithstanding the forgoing, no Restricted Shares or Restricted Share Units conditioned upon the achievement of performance shall provide the Participant with dividend or shareholder rights; provided that an Award Agreement may provide for apayment (in money or shares) equal to the dividends paid on the number of days thereafter.Common Shares payable upon vesting of such Restricted Shares or Restricted Share Units.
(v)Payment of Restricted Share Units. Restricted Share Units that become payable in accordance with their terms and conditions shall be settled in cash, Common Shares, Restricted Shares, or a combination thereof, as determined by the Committee.
5. Whether a quorum is present for the First Majority Approval and Second Majority Approval votes willB-8
(vi)Ownership. Restricted Shares shall be determinedregistered in the customary way: by computing whether more than one-halfname of the sum of all outstanding Common SharesParticipant on the books and records of Agilysys asthe Company or its designee (or by one or more physical certificates if physical certificates are issued) subject to the applicable restrictions imposed by the Plan. At the end of the Record Date eligibleRestriction Period that applies to voteRestricted Shares, the number of shares to which the Participant is entitled shall be delivered to the Participant free and clear of the restrictions, either in certificated or book-entry form. No Common Shares shall be registered in the name of the Participant with respect to Restricted Share Units, and Participants shall have no ownership interest in the Common Shares to which the Restricted Share Units relate, unless and until payment is made in Common Shares.
(vii)Forfeiture. If a Participant who holds Restricted Shares or Restricted Share Units fails to satisfy the restrictions, terms or conditions applicable to the Award, except as otherwise determined by the Committee, the Participant shall forfeit the Restricted Shares or Restricted Share Units. The Committee may at any time waive such restrictions or accelerate the date or dates on which the restrictions will lapse; however, to the extent the Restricted Shares or Restricted Share Units are presentintended to qualify for the Performance-Based Exception, the provisions of Section 6(d)(iv) will apply.
(d) Performance-Based Exception.
(i)Grants. Subject to the provisions of the Plan, Full-Value Awards granted in persona manner that is intended to qualify for the Performance-Based Exception shall be conditioned upon the achievement of Performance Goals as the Committee shall determine, in its sole discretion.
(ii)Performance Goals. Performance Goals shall be based on one or by valid proxy.
6. For quorum purposesmore Performance Measures, over a Performance Period, as to bothbe determined by the First Majority Approval voteCommittee.
(iii)Performance Measures. The Performance Measure(s) may be described in terms of objectives that are related to the individual Participant or objectives that are Company-wide or related to a subsidiary, division, department, region, function or business unit of the Company, and Second Majority Approval vote,shall consist of one or more or any combination of the following criteria: cash flow, profit, revenue, stock price, market share, sales, net income, operating income, return ratios, earnings per share, return on equity, working capital, total assets, net assets, return on assets, return on sales, return on invested capital, earnings, gross margin, costs, shareholders' equity, shareholder return and/or specific, objective and measurable non-financial objectives, productivity or productivity improvement. The Performance Goals based on these Performance Measures may be expressed in absolute terms or relative to the performance of other entities.
(iv)Treatment of Awards. With respect to any Full-Value Award that is intended to qualify for the Performance-Based Exception: (A) the Committee shall interpret the Plan and this Section 6(d) in light of Code Section 162(m), (B) the Committee shall not amend the Full-Value Award in any way that would adversely affect the treatment of the Full-Value Award under Code Section 162(m), and (C) such Full-Value Award shall not vest or be paid until the Committee shall first have certified that the Performance Goals have been achieved.
7.Deferred Payments.
Subject to the terms of the Plan, the Committee may determine that all or a portion of any Award to a Participant, whether it is to be paid in cash, Common Shares or a combination thereof, shall be deferred or may, in its sole discretion, approve deferral elections made by Participants. Deferrals shall be for such periods and upon such terms as the Committee may determine in its sole discretion, which terms shall comply with Code Section 409A.
8.Dilution and Other Adjustments.
In the event of any merger, reorganization, consolidation, liquidation, recapitalization, reclassification, redesignation, stock dividend, other distribution (whether in the form of cash, shares or otherwise), stock split, reverse stock split, spin off, combination, repurchase or exchange of shares or issuance of warrants or rights to purchase shares or other securities, or other change in corporate structure affecting the Common Shares, the Committee shall make such adjustments in the aggregate number and type of Common Shares eligible to vote at the Special Meeting (“T”), will equal the total number of outstanding Common Shares as of the close of business on November 24, 2009 (“the Record Date”), as reported by Agilysys’ transfer agent. Of the Common Shares eligible to vote at the Special Meeting the number present at the meeting
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(“P[1]”) will equal all such Common Shares present in person or by proxy. For purposes of both the First Majority Approval votewhich may be delivered and the Second Majority Approval vote, a quorum is present if P[1] is greater than one-half T.individual award maximums as set forth in Section 5, the
7. If the quorum requirement is not met, neither vote shall be conducted, tabulated or announced, and the Control Share Acquisition shall be considered to have not been approved. In any such case, a majority of the shares present (even though less than a quorum) may vote to adjourn the meeting to a date not later than January 9, 2010, and at the session reconvened after adjournment, if the quorum requirement is then met, the votes could then be conducted.B-9
8. For each Common Share as to which the Certification of Eligibility on the proxy card, separate Certification of Eligibility or ballot indicates eligibility to vote in the Second Majority Approval vote, it will be presumed that such Common Share is eligible to be voted in the Second Majority Approval vote.
9. For each Common Share as to which the Certification of Eligibility on the proxy card, separate Certification of Eligibility or ballot does not indicate eligibility to vote in the Second Majority Approval vote, or where there is no form of Certification of Eligibility provided (as where a proxy card or ballot lacks a form of certificationnumber and no separate Certification of Eligibility is provided), it will be presumed that such Common Share is ineligible to be voted in the Second Majority Approval vote.
10. For purposes of determining the eligibilitytype of Common Shares forsubject to outstanding Awards and the Second Majority Approval vote, the “Restricted Period” will commence on November 20, 2009, the dateExercise Price or other price of the first public disclosure of MAK Capital’s proposed control share acquisition, and will end on the Record Date for the Special Meeting. Shareholders who acquire Common Shares priorsubject to the commencement of the Restricted Period and who acquire “Interested Shares” during the Restricted Period for an aggregate consideration in excess of $250,000 shall be entitled to have their Common Shares acquired prior to the Restricted Period voted in determining whether the Second Majority Approval has been obtained if an appropriate Certification of Eligibility with respect to such Common Shares is provided. The form of proxy/Certification of Eligibility/ballot shall provide a means for such shareholders to indicateoutstanding Awards (provided the number of Common Shares acquired duringsubject to any Award shall always be a whole number), as may be and to the Restricted Period. If a shareholder indicates on the proxy/Certification of Eligibility/ballot that they own “Interested Shares” but does not specify how many of such Common Shares were acquired during the Restricted Period, it will be presumed that all Common Shares represented by such proxy/Certification of Eligibility/ballot are “Interested Shares.”
11. It will be presumed that proxy and Certification of Eligibility signers have truthfully and completely carried out their undertaking to supplement eligibility data in accordance therewith.
12. It will be presumed that Common Shares present in person or by proxy, but not voted at the meeting, are held by people and entities who haveextent determined to abstainbe appropriate and equitable by the Committee to prevent dilution or by brokers who are registering shares as present even though the brokers lack the authority to vote the shares at the meeting (broker non-votes).
13. If the quorum requirement is met, a vote constituting the First Majority Approval would require that the number of Common Shares voted in favorenlargement of the proposed control share acquisition exceeds one-half of P[1]. Expressed algebraically, if inbenefits or potential benefits intended to be made available under the First Majority Approval vote the number of Common Shares voted “for” equals N[1], the acquisition is approved by the First Majority Approval vote if N[1] > 1/2 P[1].
14. For purposes of calculating the Second Majority Approval vote, X equals the number of Common Shares present at the meeting as to which the Certificate of Eligibility on the proxy/Certification of Eligibility/ballot is not marked indicating eligibility. The total number of Common Shares eligible to vote at the meetingPlan. Such adjustment shall be conclusive and binding for all purposes of the Second Majority Approval (“P[2]”) will be calculated by deducting X from P[1]. Expressed algebraically, P[1] − X = P[2].
15. If the quorum requirement is met, a vote constituting the Second Majority Approval would require that the numberPlan. Any such adjustment of Common Shares voted in favor of the proposed control share acquisition exceeds one-half of the number of eligible Common Shares present (P[2]). Expressed algebraically, if in the Second Majority Approval vote the number of Common Shares voted “for” equals “N[2]”, the acquisition is approved by the Second Majority Approval vote if N[2] > 1/2 P[2].
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16. It is presumed that Agilysys can conduct a fair, honest, and efficient election. There is no such thing as a perfect election.
17. It is presumed that Common Shares owned by a corporation are eligible to be voted at the Special Meeting, absent a statutean ISO or a provision in the corporation’s articles of incorporation or regulations or similar governing documents to the contrary.
18. It will be presumed that Agilysys’ transfer agent has accurately listed the names of record holders as of the Record Date.
19. It will be presumed that Agilysys’ transfer agent has correctly calculated and listed the number of Common Shares held by each such person.
20. It will be presumed that proxies regular on their face are valid.
21. Whenever ambiguity arises in connection with a proxy/Certification of Eligibility/ballot, presumptions and determinationsSAR shall be made in favor of enfranchising stockholderscompliance with Code Sections 422 and affirming the eligibility of their Common Shares to be voted, as opposed to disenfranchising stockholders by finding their Common Shares ineligible to be voted. When a matter arises not covered by these rules424, and presumptions, validity rather than invalidity and eligibility rather than ineligibilityno such adjustment shall be the favored presumptions.
22. It will be presumedmade that each signature on a proxy, Certification of Eligibilitywould cause any Award which is or ballot is genuine.
23. It will be presumed that a signature made on behalf of a business entity is made by a person authorizedbecomes subject to act for the entity.
24. It will be presumed that a signature made in a fiduciary capacity is made by a person with authorityCode Section 409A to act in that capacity.
25. It will be presumed that signatures that are hand-printed, made by rubber stamp or other mechanical device or by facsimile are valid.
26. It will be presumed that, in the case of signatures where initials or abbreviations are used in place of names of record, where names are used in place of initials in a name of record, where first and middle names or initials are added, or deleted from a name of record, where a married name is used in place of a maiden name of record, where titles are added or deleted from the name of record, or where organization indicia such as Co., Corp., Ltd., LLP and the like are added or deleted from the name of record, the proxy/Certification of Eligibility/ballot is valid.
27. It will be presumed that a proxy/Certification of Eligibility/ballot, if dated, was executed on the date indicated.
28. It will be presumed that undated proxies and certifications of eligibility otherwise regular are valid.
29. Where a record owner submits multiple proxies/Certifications of Eligibility/ballots, the most recent submission before the polls close will be presumed valid,fail to be determined by the date on the proxy/Certification of Eligibility/ballot, or in the case of multiple proxies/Certifications of Eligibility/ballots executed of even date by the most recent postmark or other similarly verifiable transmission date and time.
30. Where a proxy/Certification of Eligibility/ballot is legibly signed by a record owner, it will be presumed valid even if the proxy/Certification of Eligibility/ballot indicates no number of shares, no printed or stenciled name or address, or states any such information incorrectly, in which case the number of shares shown on the corporate records shall control.
31. Unless otherwise expressly indicated to the contrary, a proxy/Certification of Eligibility/ballot will be presumed as intended to vote all the shares of the record owner submitting the proxy/Certification of Eligibility/ballot.
32. It is presumed that Nominees will comply with applicable laws, including SEC rules for obtaining and reporting votes cast by the beneficial owners, by:requirements of Code Section 409A or is exempt from Code Section 409A to become subject to Code Section 409A.
(a) correctly identifying each beneficial owner as of the record date;
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(b) correctly computing the number of shares held by each as of the record date;9.Change in Control.
(c) taking all reasonable and customary steps to communicate with each beneficial owner;
(d) accurately tabulating the information transmitted to them from beneficial owners; and
(e) truthfully and accurately reporting that tabulation on an omnibus proxy.
33. Proxies/Certifications of Eligibility/ballots transmitted by telegram, telex, telecopy or similar conveyance will be presumed valid, so long as they conform to the content of the relevant proxy/Certification of Eligibility/ballot.
34. It will be presumed that proxies/Certifications of Eligibility/ballots were not signed by persons who suffer a legal disability of any kind or under fraudulent or coercive circumstances.
35. It will be presumed that people who appear to vote in person are who they say they are, and are not impostors impersonating record stockholders.
36. Notwithstanding any other provision herein:of the Plan to the contrary, immediately upon the occurrence of a Change in Control, the following provisions of this Section 9 shall apply except to the extent an Award Agreement provides for a different treatment (in which case the Award Agreement shall govern):
(a) All proxies/Certificationsall outstanding Stock Options and SARs vest and become fully exercisable; and
(b) all Full-Value Awards become fully vested.
10.Termination.
(a) Termination by Death, Disability, or Retirement. The terms and conditions of Eligibility/ballots received fromthe Participant's Award Agreement shall govern the extent, if at all, to which the vesting of any Award is accelerated or forfeited due to a Nominee will be counted,Participant's death, Disability, or Retirement; provided that, (1)for Full-Value Awards intended to qualify for the total numberPerformance-Based Exception, no vesting may occur or no distribution may be made prior to the attainment of Common Shares representedthe Performance Goals.
(b) Termination for Cause. If a Participant's employment or service terminates for Cause, (i) all Stock Options and SARs (or portions thereof) which have not been exercised, whether vested or not, and (ii) all Full-Value Awards, shall immediately be forfeited upon termination, including such Awards that are subject to performance conditions (or unearned portions thereof).
(c) Other Terminations. If a Participant's employment or service terminates, voluntarily or involuntarily, for any reason other than death, Disability, Retirement or Cause, (i) any vested portion of Stock Options or SARs held by the Participant at the time of termination may be exercised for a period of three months (or such proxies/Certificationsother period as the Committee may specify at or after the time of Eligibility/ballotsgrant) from the termination date, or until the expiration of the original term of the Stock Option or SAR, whichever period is shorter, (ii) no unvested portion of any Stock Option or SAR shall become vested, including such Awards that are subject to performance conditions (or unearned portions thereof), and (iii) all Full-Value Awards, including such Awards that are subject to performance conditions (or unearned portions thereof), shall immediately be forfeited upon termination.
(d) Limitation for ISOs. No ISO may be exercised more than three months following termination of employment for any reason (including Retirement) other than death or Disability, nor more than one year following termination of employment for the reason of death or Disability (as defined in Code Section 422), or such Award will no longer qualify as an ISO and shall thereafter be, and receive the tax treatment applicable to, an NQSO. For this purpose, a termination of employment is cessation of employment, under the rules applicable to ISOs, such that no employment relationship exists between the Participant and the Company.
(e) Transfers and Leaves of Absence. The transfer of a Participant within the Company shall not be deemed a termination of employment except as required by Code Sections 422 and 409A, and other applicable laws. The following leaves of absences are not deemed to be a termination of employment:
(i)if approved in writing by the Company, for military service, sickness or any other purpose approved by the Company, and the period of absence does not exceed 90 days;
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(ii)if in excess of 90 days, if approved in writing by the sum of (A)Company, but only if the total number of Common Shares registered inParticipant's right to reemployment is guaranteed by statute or contract and provided that the nameParticipant returns to work within 30 days after the end of such Nominee plus (B)absence; and
(iii)subject to the total numberrestrictions of Common Shares held forCode Section 409A and to the accountextent that such discretion is permitted by law, if the Committee determines in its discretion that the absence is not a termination of such Nomineeemployment.
11.Recoupment or Recovery Policy.
Any Award shall be subject to forfeiture or repayment pursuant to the terms of any applicable compensation recoupment or recovery policy adopted by the Company, Committee or Board, as thereafter amended, including any depositarypolicy adopted to comply with the rules of any stock exchange on which has submitted an omnibus proxy authorizing such Nominee to vote the Common Shares held for its account, (2) no specific language has been added to any proxy/Certification of Eligibility/ballot, aside fromare traded or the printed language on the proxy/Certification of Eligibility/ballot form, expressly revoking any prior proxy or proxies/Certifications of Eligibility/ballots solicited by the same party, but any such revocation shall be given effect,Securities and (3)Exchange Commission.
12.Miscellaneous Provisions.
(a) Rights as a later dated proxy/Certification of Eligibility/ballot bearing one account number or other identifying number or symbol will revoke any earlier dated proxy/Certification of Eligibility/ballot which bears the same account number or other identifying number or symbol and Common Shares.
(b)Shareholder. Except as otherwise provided in the following sentence, where the total number of Common Shares represented by proxies submitted byherein, a single Nominee exceeds the sum of (A) the total number of Common Shares registered in the name of such Nominee plus (B) the total number of Common Shares held for the account of such Nominee by any depositary which has submitted an omnibus proxy authorizing such NomineeParticipant shall have no rights as a shareholder with respect to voteAwards hereunder, unless and until the Common Shares held for its account,have been registered to the Inspector shall endeavor to procure an explanation for the overvote, as expeditiously as possible, by telephonic statement from such Nominee,Participant as the Inspector deems appropriate, and after receiving and considering such informationowner.
(b) No Loans. No loans from the Inspector shall determine the manner in which the proxies/Certifications of Eligibility/ballotsCompany to Participants shall be voted. Notwithstanding anything herein stated, in the event of such an overvote, if all of such proxies/Certifications of Eligibility/ballots submitted by a single Nominee are in favor of, or against, authorization of the proposed control share acquisition, such proxies/Certifications of Eligibility/ballots shall be deemed valid for a number of Common Shares equal to the sum of (A) the total number of Common Shares registered in the name of such Nominee plus (B) the total number of Common Shares held for the account of such Nominee by any depositary which has submitted an omnibus proxy authorizing such Nominee to vote the Common Shares held for its account.
(c) A Nominee proxy/Certification of Eligibility/ballot may be signed in the name of the Nominee as registered, without requiring the signature of an individual as a partner or as an officer.
37. Notwithstanding anything herein contained, in the absence of other ambiguity, as determined by the Inspector, a Nominee proxy which does not specify a designated number of Common Shares shall be valid for the sum of (A) the total number of Common Shares registered in the name of such Nominee and (B) the total number of Common Shares held for the account of such Nominee by any depositary which has submitted an omnibus proxy authorizing such Nominee to vote the Common Shares held for its account.
38. The truth and accuracy of any Certification of Eligibility used as the basis for making any calculation hereunder for the Special Meeting may be challenged by evidence deemed competent and reliable by the Presiding Inspector which is timely submitted prior to the certification of the vote, in which case the eligibility of any Common Share to
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be voted will be determined by the Presiding Inspector as provided below. Besides any such extrinsic evidence mentioned in the preceding sentence or elsewhere herein, if the classification of a Common Share as “interested” or as not “interested” is called into question by a timely challenge supported by competent and reliable evidence, the Presiding Inspector shall undertake such inquiry as the Presiding Inspector deems appropriate to resolve the matter in the light of Sections 1701.01(CC), 1701.50, and 1701.831 of the Ohio Revised Code, the books and records of Agilysys, and this Memorandum, unless otherwise provided by Ohio law. All challenges, regardless of nature, are to be determined by the Presiding Inspector in consultation with the Inspector. In the event that no Presiding Inspector is appointed, all decisions, determinations and inquiries required to be made by the Presiding Inspector hereunder shall be made by the Inspector. Agilysys will request the Inspector to conduct the review and tabulation of proxies as expeditiously as possible so that the results of the vote may be determined at the earliest practicable date. Any matter not expressly covered by this Memorandum shall be dealt with in accordance with Ohio law.
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SCHEDULE A TO STATEMENT OF
PRESUMPTIONS AND PROCEDURES FOR SPECIAL MEETING
CERTIFICATION AS TO ELIGIBILITY TO VOTE
As described in the Proxy Statement, the Ohio Control Share Acquisition Statute requires that the Control Share Acquisition be authorized by a vote of the majority of Common Shares of Agilysys, Inc. (“Agilysys”) entitled to vote in the election of directors represented at the Special Meeting in person or by proxy, excluding any “Interested Shares.” Any terms used but not defined herein shall have the meaning assigned to them in the Proxy Statement. For purposes of the Ohio Control Share Acquisition Statute, “Interested Shares” means Common Shares in respect of which any of the following persons may exercise or direct the exercise of the voting power:
1. MAK Capital or any of its affiliates;
2. Any officer of Agilysys elected or appointed by the directors of Agilysys;
3. Any employee of Agilysys who is also a director of Agilysys;
4. Any person that acquires Common Shares for valuable consideration during the period beginning on November 20, 2009 and ending on November 24, 2009 (the “Record Date”) if the aggregate consideration paid or given by the person who acquired the Common Shares, and any other persons acting in concert with the person, for all those Common Shares exceeds $250,000; or
5. Any person that transfers such Common Shares for valuable consideration after the Record Date as to Common Shares so transferred, if accompanied by the voting power in the form of a blank proxy, an agreement to vote as instructed by the transferee, or otherwise.
As of the date upon which the undersigned executes this proxy card, the undersigned hereby certifies that the Common Shares being voted pursuant to this proxy card are:
(Please mark only one Box)
[ ] not “Interested Shares” as defined in the Ohio Control Share Acquisition Statute.
OR
[ ] “Interested Shares” as defined in the Ohio Control Share Acquisition Statute.
If you own “Interested Shares” because you acquired more than $250,000 of Common Shares between November 20, 2009 and the Record Date, please indicate in the following space the number of Common Shares you acquired prior to November 20, 2009, which you continued to own as of the Record Date and therefore will be entitled to votepermitted in connection with the Second Majority Approval atPlan.
(c) Assignment or Transfer. Except as otherwise provided under the Special Meeting.
NumberPlan, no Award or any rights or interests therein shall be transferable other than by will or the laws of Common Shares acquired priordescent and distribution. The Committee may, in its discretion, provide that an Award (other than an ISO) is transferable without the payment of any consideration to November 20, 2009, which continuea Participant's family member, subject to such terms and conditions as the Committee may impose. For this purpose, "family member" has the meaning given to such term in the General Instructions to the Form S-8 registration statement under the Securities Act. All Awards shall be owned as ofexercisable, during the Record Date: November 24, 2009.
If you checkedParticipant's lifetime, only by the “Interested Shares” box but did not indicate how many eligible Common Shares you own that were purchased priorParticipant or a person who is a permitted transferee pursuant to November 20, 2009, all of your Common Shares will be considered “Interested Shares” and therefore will not be eligible to vote in connection with the Second Majority Approval at the Special Meeting.
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If (i) no box is checked indicating whether Common Shares represented by this proxy card are “Interested Shares” or (ii) both of the above-boxes are checked,Section 12(c). Once awarded, the Common Shares represented(other than Restricted Shares) received by this proxy willParticipants may be deemedfreely transferred, assigned, pledged or otherwise subjected to lien, subject to the restrictions imposed by the Securities Act, Section 16 of the Exchange Act and the Company's Insider Trading Policy, each as amended.
(d) Withholding Taxes. The Company shall have the right to deduct from all Awards paid in cash to a Participant any taxes required by law to be “Interested Shares” and therefore ineligible to vote in connection with the Second Majority Approval, as described in the Proxy Statement.
By signing on the reverse side, you (a) instruct that the Common Shares represented by this proxy card be voted as marked on the front side; (b) certify whether or not your Common Shares are “Interested Shares” as defined in the Ohio Control Share Acquisition Statute; and (c) undertake to notify Agilysys if at any time after the Record Date you transfer Common Shares entitled to vote in the election of directors, for valuable consideration, accompanied by the voting power in the form of a blank proxy, an agreement to vote as instructed by the transferee, or otherwise.
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IMPORTANT
Your vote is very important! No matter how many Common Shares you own, vote your Common Shares by completing, signing, dating and mailing the enclosed WHITE proxy card in the postage-paid envelope provided. The Board of Directors is expressing no opinion and is remaining neutral on the Control Share Acquisition proposal, but recommends that you voteFORthe adjournment proposal on the accompanying WHITE proxy card. Please be sure to complete the certification included on the reverse side of the WHITE proxy card and to mark the appropriate box indicating whether you are a holder of Interested Shares.
If you have any questions, or need any assistance in voting your shares or determining whether you are a holder of Interested Shares, please contact our proxy solicitor, Georgeson Inc., toll-free at800-336-5134 (Banks and brokers may call collect at212-440-9800). If your Common Shares are held in the name of a brokerage firm, bank, bank nominee or other institution, only it can vote such Common Shares and only upon receipt of your specific instructions. Accordingly, please follow the instructions provided by your bank or broker in order to vote your Common Shares and provide your certification.
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Exhibit C
OHIO LAW
I. 1704.01 TRANSACTIONS INVOLVING INTERESTED SHAREHOLDERS DEFINITIONS.
As used in this chapter, unless the context otherwise requires:
(A) “Corporation,” “domestic corporation,” “foreign corporation,” “state,” “articles,” “shareholder,” “person,” “principal office,” “express terms,” “treasury shares,” “parent corporation,” “parent,” “subsidiary corporation,” “subsidiary,” “combination,” “transferee corporation,” “majority share acquisition,” “acquiring corporation,” “voting shares” when used in connection with a combination or majority share acquisition, “constituent corporation,” “surviving corporation,” “close corporation agreement,” and “issuing public corporation” have the same meanings as in section 1701.01 of the Revised Code.
(B) “Chapter 1704. transaction”means any of the following:
(1) A merger, consolidation, combination, or majority share acquisition between or involving an issuing public corporation or any subsidiary of an issuing public corporation and any of the following:
(a) An interested shareholder;
(b) A person, partnership, corporation, or other entity, however organized, whether or not it is an interested shareholder, that is, or after the merger, consolidation, combination, or majority share acquisition would be, an affiliate or associate of an interested shareholder.
(2)(a) Subject to the exception in division (B)(2)(b) of this section, a purchase, lease, sale, distribution, dividend, exchange, mortgage, pledge, transfer, or other disposition of assets, directly or indirectly owned or controlled by the issuing public corporation, by, to, with, or for the benefit of an interested shareholder or an affiliate or associate of an interested shareholder in one or more transactions, if, in any of those transactions, the assets meet any of the following conditions:
(i) The assets have an aggregate fair market value equal to at least five per cent of the aggregate fair market value of all the assets, determined on a consolidated basis, of the issuing public corporation;
(ii) The assets have an aggregate fair market value equal to at least five per cent of the aggregate fair market value of all the outstanding shares of the issuing public corporation;
(iii) The assets represent at least ten per cent of the earning power or income of the issuing public corporation, determined on a consolidated after-tax basis and after excluding any transaction other than in the ordinary course of business.
(b) One or more transactions in the ordinary course of business of an issuing public corporation on terms no more favorable to the interested shareholder than those acceptable to third parties, as shown by contemporaneous transactions, is not a Chapter 1704. transaction under division (B)(2)(a) of this section.
(3)(a) Subject to the exception in division (B)(3)(b) of this section, a purchase, lease, sale, exchange, transfer, or other disposition of assets directly or indirectly owned or controlled by the interested shareholder or an affiliate or associate of the interested shareholder, by, to, with, or for the benefit of the issuing public corporation in one or more transactions, if, in any of those transactions, the assets meet any of the conditions set forth in division (B)(2)(a)(i), (ii), or (iii) of this section.
(b) One or more transactions in the ordinary course of business of an issuing public corporation on terms no more favorable to the interested shareholder than those acceptable to third parties, as shown by contemporaneous transactions, is not a Chapter 1704. transaction under division (B)(3)(a) of this section.
(4) The issuance or transfer to an interested shareholder or an associate or affiliate of an interested shareholder of any shares, or of any rights to acquire shares, of the issuing public corporation or a subsidiary of the issuing public corporation by the issuing public corporation or a subsidiary of the issuing public corporation, in one or more
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transactions, if the shares, or the rights, have an aggregate fair market value equal to at least five per cent of the aggregate fair market value of all the outstanding shares of the issuing public corporation and if the shares, or the rights, are not issued or transferred pursuant to the exercise of warrants, rights, or options to purchase that have been issued, or pursuant to a dividend paid or a distribution made, proportionately to all shareholders of the issuing public corporation.
(5) The adoption of a plan or proposal for the dissolution, winding up of the affairs, or liquidation of the issuing public corporation that is proposed by, on behalf of, or pursuant to a written or unwritten agreement, arrangement, or understanding with an interested shareholder or an affiliate or associate of an interested shareholder.
(6) Any of the following, if the direct or indirect effect is to increase the proportionate share of the outstanding shares of the issuing public corporation or a subsidiary of the issuing public corporation beneficially owned by an interested shareholder or an affiliate or associate of an interested shareholder, unless the increase is the result of immaterial changes due to fractional share adjustments:
(a) A reclassification of securities, including a share split, a share dividend or other distribution of shares, or a reverse share split;
(b) A recapitalization of the issuing public corporation;
(c) A merger, consolidation, combination, or majority share acquisition between or involving the issuing public corporation and a subsidiary of the issuing public corporation;
(d) Any other transaction, whether or not with, into, or involving the interested shareholder, that is proposed by, on behalf of, or pursuant to a written or unwritten agreement, arrangement, or understanding with the interested shareholder or an affiliate or associate of the interested shareholder.
(7) Receipt by an interested shareholder or an affiliate or associate of an interested shareholder of the direct or indirect benefit of a loan, advance, pension or any other employee benefit plan termination, guarantee, pledge, mortgage, security agreement, financing statement, deed of trust, or other financial assistance, or a tax credit or other tax advantage, provided by or through the issuing public corporation or any subsidiary of the issuing public corporation unless the interested shareholder receives the benefit proportionately as a holder of shares of the issuing public corporation.
(C) When used in connection with a Chapter 1704. transaction:
(1) “Affiliate”means a person that directly, or indirectly through one or more intermediaries, controls, is controlled by, is under common control with, or acts in concert with, a specified person.
(2) “Announcement date”means the date of the first public announcement of a definitive proposal for a Chapter 1704. transaction.
(3) “Associate”of a person means any of the following:
(a) A corporation, partnership, or other entity, however organized, of which the person is an officer, director, or partner or is the beneficial owner of shares entitling that person to exercise at least ten per cent of the voting power in the election of the directors or other governing body of that corporation, partnership, or other entity;
(b) A trust or other estate, including any employee stock ownership or benefit plan, however designated, in which the person has a substantial beneficial interest or as to which the person serves as trustee or in a similar fiduciary capacity;
(c) A relative or spouse of the person, or a relative of the spouse of the person, who has the same principal residence as the person.
(4) “Beneficial owner”of shares means a person who,withheld with respect to particular shares, meets any of the following conditions:
(a) The person directly or indirectly, alone or with others, including affiliates or associates of that person, beneficially owns the shares;
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(b) The person directly or indirectly, alone or with others, including affiliates or associates of that person, has the right, whether exercisable immediately or only after the passage of time, conditionally, unconditionally, or otherwise, to acquire the shares pursuant to a written or unwritten agreement, arrangement, or understanding or upon the exercise of conversion rights, exchange rights, warrants, calls, options, or otherwise;
(c) The person directly or indirectly, alone or with others, including affiliates or associates of that person, has the right to vote or direct the voting of the shares pursuant to a written or unwritten agreement, arrangement, or understanding;
(d) The person has a written or unwritten agreement, arrangement, or understanding with another person who is directly or indirectly a beneficial owner, or whose affiliates or associates are direct or indirect beneficial owners, of the shares, if the agreement, arrangement, or understanding is for the purpose of the first person’s or the other person’s acquiring, holding, disposing of, voting, or directing the voting of the shares to or for the benefit of the first person. A bank, broker, nominee, trustee, or other person who acquires shares for the benefit of others in the ordinary course of business in good faith and not for the purpose of circumventing the provisions of this chapter shall, however, be deemed to be the beneficial owner only of shares in respect of which that person, without further instruction from others, holds voting power.
(5) “Consummation date”means the date on which consummation of a Chapter 1704. transaction occurs.
(6) “Control,”“controlled by,” or“under common control with”refers to the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the exercise of or the ability to exercise voting power, by contract, or otherwise, except that “control” of a corporation is not established for purposes of this division if a person, in good faith and not for the purpose of circumventing the provisions of this chapter, holds voting power as an agent, custodian, bank, broker, nominee, or trustee for one or more beneficial owners who do not individually or as a group have control of the corporation.
(7) “Exchange Act”means the “Securities Exchange Act of 1934,” 48 Stat. 881, 15 U.S.C.A.78a-78jj, as amended, and any successor or replacement legislation and amendments to the successor or replacement legislation.
(8) “Interested shareholder,”such Awards. All statutory minimum applicable withholding taxes arising with respect to an issuing public corporation, meansAwards paid in Common Shares to a person other thanParticipant shall be satisfied by the issuing public corporation,Company retaining Common Shares having a subsidiary of that issuing public corporation, any employee stock ownership or benefit plan of the issuing public corporation or a subsidiary of that issuing public corporation, or any trustee or fiduciary with respect to any such plan acting in such capacity who is the beneficial owner of a sufficient number of shares of the issuing public corporation that, when added to all other shares of the issuing public corporation in respect of which that person may exercise or direct the exercise of voting power, would entitle that person, directly or indirectly, alone or with others, including affiliates and associates of that person, to exercise or direct the exercise of ten per cent of the voting power of the issuing public corporation in the election of directors after taking into account all of that person’s beneficially owned shares that are not currently outstanding.
(9) “Disinterested shares”means voting shares beneficially owned by any person not an interested shareholder or an affiliate or associate of an interested shareholder.
(10) “Share acquisition date,” with respect to any person, meansFair Market Value on the date on which that person first becomes an interested shareholder of an issuing public corporation.
(11) “Voting shares”means shares of a domestic or foreign corporation, entitling the holder of the shares to vote at the time in the election of directors of the corporation without regard to the voting power represented by shares that thereafter may exist upon a default, failure, or other contingency.
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II. | 1704.02 PROHIBITING CERTAIN TRANSACTIONS DURING THREE-YEAR PERIOD. |
An issuing public corporation shall not engage in a Chapter 1704. transaction for three years after an interested shareholder’s share acquisition date unless either of the following applies:
(A) Prior to the interested shareholder’s share acquisition date, the directors of the issuing public corporation have approved, for the purposes of this chapter, the Chapter 1704. transaction or the purchase of shares by the interested shareholder on the interested shareholder’s share acquisition date;
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(B) Any of the provisions of section 1704.05 of the Revised Code makes this chapter inapplicable, except that if the Chapter 1704. transactiontax is of a type described in section 1701.76, 1701.78, 1701.79, 1701.80, 1701.801, 1701.802, or 1701.86 of the Revised Code, there also must be compliance with the provisions of that section.
III. 1704.03 CORPORATION ENGAGING IN CERTAIN TRANSACTIONS.
(A) At any time after the three-year period described in section 1704.02 of the Revised Code, the issuing public corporation may engage in a Chapter 1704. transaction, provided that if the Chapter 1704. transaction is of a type described in section 1701.76, 1701.78, 1701.79, 1701.80, 1701.801, 1701.802, or 1701.86 of the Revised Code, there is compliance with the provisions of that section, and provided that at least one of the following is satisfied:
(1) Any of the provisions of section 1704.05 of the Revised Code makes this chapter inapplicable;
(2) Prior to the interested shareholder’s share acquisition date, the directors of the issuing public corporation had approved the purchase of shares by the interested shareholder on the interested shareholder’s share acquisition date;
(3) The Chapter 1704. transaction is approved, at a meeting held for that purpose, by the affirmative vote of the holders of shares of the issuing public corporation entitling them to exercise at least two-thirds of the voting power of the issuing public corporation in the election of directors, or of such different proportion as the articles may provide, provided the Chapter 1704. transaction also is approved by the affirmative vote of the holders of at least a majority of the disinterested shares;
(4) The Chapter 1704. transaction meets both of the following conditions:
(a) It results in the receipt per share by the holders of all outstanding shares of the issuing public corporation not beneficially owned by the interested shareholder of an amount of cash that, when added to the fair market value as of the consummation date of the Chapter 1704. transaction of noncash consideration, aggregates at least the higher of the following:
(i) The figure determined under division (B)(1) of this section;
(ii) The preferential amount per share, if any, to which holders of shares of that class or series of shares are entitled upon voluntary or involuntary dissolution of the issuing public corporation, plus the aggregate amount per share of dividends declared or due that those holders are entitled to receive before payment of dividends on another class or series of shares, unless the aggregate amount per share of those dividends is included in the preferential amount.
(b) The form of consideration to be received by holders of each particular class or series of outstanding shares of the issuing public corporation in the Chapter 1704. transaction, apart from any portiondetermined that is interest, is in cash or, if the interested shareholder previously purchased shares of that class or series, is in the same form the interested shareholder previously paid to acquire the largest number of shares of that class or series, but in no event shall the fair market value of the consideration received by a holder of a share of a particular class or series of outstanding shares in the Chapter 1704. transaction be less than the current fair market value of a share of the issuing public corporation of the same class or series.
(B)(1) For purposes of making a determination under division (A)(4)(a) of this section, the figure to be used in division (A)(4)(a)(i) of this section shall be the highest, after taking into account interest to the extent provided in division (B)(2) of this section, of the following:
(a) The fair market value per share on the announcement date of the Chapter 1704. transaction;
(b) The fair market value per share on the interested shareholder’s share acquisition date;
(c) The highest price per share paid, including brokerage commissions, transfer taxes, and soliciting dealers’ fees, by the interested shareholder, or by an affiliate or associate of the interested shareholder, for shares of the same class or series within the three years immediately before and including the announcement date of the Chapter 1704. transaction;
(d) The highest price per share paid, including brokerage commissions, transfer taxes, and soliciting dealers’ fees, by the interested shareholder, or by an affiliate or associate of the interested shareholder, for shares of the same class or series within the three years immediately before and including the interested shareholder’s share acquisition date.
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(2) Each determination under division (B)(1)(a), (b), (c), or (d) of this section shall include interest compounded annually from the earliest date as of which the per share fair market value was determined or on which that highest per share purchase price was paid through the consummation date of the Chapter 1704. transaction, at the rate of interest paid on one-year United States treasury obligations from time to time in effect, less the aggregate amount of any cash and the fair market value, as of the payment date, of any noncash dividends or other distributions paid per share since that date, upequal to the amount of such statutory minimum applicable withholding tax (rounded, if necessary, to the interest.next lowest whole number of Common Shares); provided, however, that, subject to any restrictions or limitations that the Company deems appropriate, a Participant may elect to satisfy such statutory minimum applicable withholding tax through cash or cash proceeds.
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IV. | 1704.04 DETERMINING FAIR MARKET VALUE OF SHARES ON DATE IN QUESTION. |
(A) For purposes of this chapter,(e) No Rights to Awards. Neither the fair market value on the date in question of sharesPlan nor any action taken hereunder shall be determinedconstrued as follows:giving any person any right to be retained in the employ or service of the Company, and the Plan shall not interfere with or limit in any way the right of the Company to terminate any person's employment or service at any time. Except as set forth herein, no employee or other person shall have any claim or right to be granted an Award under the Plan. By accepting an Award, the Participant acknowledges and agrees that (i) the Award will be exclusively governed by the Plan, including the right of the Company to amend or cancel the Plan at any time without the Company incurring liability to the Participant (except, to the extent the terms of the Award so provide, for Awards already granted under the Plan), (ii) Participant is not entitled to future award grants under the Plan or any other plan, and (iii) the value of any Awards received shall be excluded from the calculation of termination or other severance payments or benefits.
(f) Beneficiary Designation. To the extent allowed by the Committee, each Participant under the Plan may name any beneficiary or beneficiaries to whom any benefit under the Plan is to be paid in case of his or her death before he or she receives all of such benefit. Unless the Committee determines otherwise, each such designation shall revoke all prior designations by the same Participant, shall be in a form prescribed by the Committee and shall be effective only when received
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in writing by the Company during the Participant's lifetime. In the absence of any such designation, benefits remaining unpaid at the Participant's death shall be paid to the Participant's estate.
(g) Fractional Shares. Fractional Common Shares shall not be issued or transferred under an Award, but the Committee may direct that classcash be paid in lieu of fractional shares or series ofmay round off fractional shares, is listed on a United States securities exchange registeredin its discretion.
(h) Unfunded Plan. The Plan shall be unfunded and any benefits under the Exchange Act, the fair market valuePlan shall be the simple arithmetic average closing sale price during the thirty calendar days immediately before the date in question of a share of that class or series on the principal such exchange on which that class or series is listed;
(2) If that class or series of shares is not listed onrepresent an exchange described in division (A)(1) of this section, the fair market value shall be the simple arithmetic average closing bid quotation during the thirty calendar days immediately before the date in question for a share of that class or series on the national association of securities dealers automated quotation system or any similar system then in use;
(3) If no quotations described in division (A)(1) or (2) of this section are available, the fair market value shall be determined in good faithunsecured promise to pay by the directors of the issuing public corporation.
(B) For purposes of this chapter, the fair market value on the date in question of property other than cash or shares shall be determined in good faith by the directors of the issuing public corporation.
This chapter does not applyCompany. With respect to any of the following:
(A) A Chapter 1704. transaction if on the interested shareholder’s share acquisition date, the issuing public corporation, other than a bank as defined in section 1101.01 of the Revised Code, didpayments not have a class of voting shares registered or traded on a national securities exchange or registered under section 12(g) of the Exchange Act or was not required to file periodic reports and information pursuant to section 15(d) of the Exchange Act.
(B)(1) A Chapter 1704. transaction if the interested shareholder was an interested shareholder on the date immediately preceding the effective date of this section; except that this chapter shall apply, and the share acquisition date shall be the date, when the interested shareholder increases its beneficial ownership of voting power of the issuing public corporationyet made to a proportion in excess of the proportion of voting power that the interested shareholder beneficially owned on the date immediately preceding the effective date of this section unless the interested shareholder’s subsequent increase in beneficial ownership results from or is the consequence of any of the following circumstances:
(a) The increase is by bequest or inheritance, by operation of law upon the death of any individual, or by any other transfer without valuable consideration, including a gift, that is made in good faith and not for the purpose of circumventing the provisions of this chapter;
(b) The increase is pursuant to the satisfaction of a pledge or other security interest created in good faith and not for the purpose of circumventing the provisions of this chapter;
(c) The increase is the result solely of the purchase by the issuing public corporation of shares issued by it;
(d) The increase is in accordance with approval by the directors of the issuing public corporation before the increase occurred.
(2) If this chapter would have applied to the increase of beneficial ownership described in division (B)(1) of this section but for the application of an exception described in division (B)(1)(a), (b), (c), or (d) of this section, this
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chapter shall apply if the interested shareholder’s subsequent increase in its proportion of beneficial ownership is not the result or a consequence of any of the circumstances described in division (B)(1)(a), (b), (c), or (d) of this section.
(C) A Chapter 1704. transaction if the interested shareholder was an interested shareholder on the date immediately preceding the effective date of this section and inadvertently increases its beneficial ownership of voting power of the issuing public corporation to a proportion in excess of the proportion of voting power that the interested shareholder beneficially owned on the date immediately preceding the effective date of this section, provided that, as soon as practicable, the interested shareholder divests itself of beneficial ownership of a sufficient number of voting shares of the issuing public corporation that the interested shareholder is no longer the beneficial owner of a proportion of voting power in excess of the proportion of voting power that the interested shareholder beneficially owned on the date immediately preceding the effective date of this section.
(D)(1) A Chapter 1704. transaction if a person becomes an interested shareholder through an acquisition of voting shares that resulted from or was the consequence of any of the circumstances described in division (B)(1)(a), (b), (c), or (d) of this section, except that this chapter shall apply, and the share acquisition date shall be the date, when the interested shareholder increases its beneficial ownership of voting power of the issuing public corporation to a proportion in excess of the proportion of voting power that the interested shareholder beneficially owned on the date on which it became an interested shareholder unless the interested shareholder’s subsequent increase in beneficial ownership results from or is a consequence of any of the circumstances described in division (B)(1)(a), (b), (c), or (d) of this section.
(2) If this chapter would have applied to the acquisition of voting shares described in division (D)(1) of this section but for the application of an exception described in division (B)(1)(a), (b), (c), or (d) of this section, this chapter shall apply if the interested shareholder’s subsequent increase in its proportion of beneficial ownership is not the result or a consequence of any of the circumstances described in division (B)(1)(a), (b), (c), or (d) of this section.
(E) A Chapter 1704. transaction if a person became an interested shareholder inadvertently, provided that, as soon as practicable, the person divests itself of beneficial ownership of a sufficient number of voting shares of the issuing public corporation that the person no longer is an interested shareholder.
(F)(1) Subject to division (F)(2) of this section, a Chapter 1704. transaction if the original articles of the issuing public corporation state, or if the articles of the issuing public corporation have been amended in compliance with the provisions of section 1701.70, 1701.71, or 1701.72 of the Revised Code to state, by specific reference to this chapter, that this chapter does not apply to the corporation and if any of the following applies:
(a) The corporation had fewer than fifty shareholders or was not an issuing public corporation when the statement initially was set forth in the articles.
(b) No shareholder of the corporation qualified as an interested shareholder when the statement was initially set forth in the articles.
(c) The statement was contained in an amendment to the articles and the amendment was approved by the holders of two-thirds of all outstanding shares of the corporation entitled to vote in the election of directors and by the holders of two-thirds of all outstanding disinterested shares of the acquiring public corporation entitled to vote in the election of directors.
(2) If, however, a Chapter 1704. transaction would have been prohibited but for the adoption of an amendment to the articles in compliance with division (F)(1)(b) or (c) of this section, the issuing public corporation shall not engage in a Chapter 1704. transaction for twelve months following the adoption of the amendment; in addition, if this chapter would have applied to a person who became an interested shareholder prior to the adoption of such an amendment, this chapter shall continue to apply to a Chapter 1704. transaction between the issuing public corporation and the interested shareholder as if the amendment had not been adopted.
(G) A Chapter 1704. transaction between an acquiring public corporation and any employee benefit plan, or any trust under any employee benefit plan, established by the issuing public corporation, and any distribution or payment made by the employee benefit plan or trust to any beneficiary.
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(H) A Chapter 1704. transaction that involves any acquisition of securities of an issuing public corporationParticipant pursuant to an employee stock option plan, an employee stock purchase plan, an employee stock bonus plan, an employee stock ownership plan,Award, nothing contained in the Plan or any similar plan designed to benefit one or more employees established byAward Agreement shall give the issuing public corporation, provided the acquisitionParticipant any rights that are greater than those of a general unsecured creditor of the securities and the establishment of, any amendment to, and the administration of the plan are in good faith and not for the purpose of circumventing the provisions of this chapter.Company.
(I) A Chapter 1704. transaction that involves compensation directly or indirectly received by a director, officer, employee, agent, or independent contractor of an issuing public corporation in return for services rendered or to be rendered to the issuing public corporation, provided the payment of the compensation and the services rendered, or to be rendered, are in good faith and not for the purpose of circumventing the provisions of this chapter.
(J) A Chapter 1704. transaction that involves any loan of money or property of an issuing public corporation to a director, officer, employee, agent, or independent contractor of the issuing public corporation, provided the loan is designed to encourage the rendering of needed, valuable, and efficient services to the issuing public corporation and provided the loan is made and the services are rendered, or are to be rendered, in good faith and not for the purpose of circumventing the provisions of this chapter.
(K) A Chapter 1704. transaction in which an issuing public corporation makes a loan of money or other property to, guarantees any loan of money or other property to, or guarantees any obligation of, an employee stock ownership plan, as defined in Section 4975(e)(7) of the “Internal Revenue Code of 1986,” 68A Stat. 3, 26 U.S.C.A. 1, as amended, of the issuing public corporation.
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VI.(i) Severability. | 1704.06 CONTENTS OF ARTICLES OF INCORPORATION. |
(A) If the original articles of an issuing public corporation state, or if the articles of an issuing public corporation have been amended to state, by specific reference to this chapter, that this chapter does not apply to the corporation, the corporation may amend its articles, in compliance with the provisions of section 1701.70, 1701.71, or 1701.72 of the Revised Code, to eliminate or modify that statement.
(B) For any corporation, whether or not it is an issuing public corporation, regulations of the corporation may be adopted or amended, in compliance with the provisions of section 1701.11 of the Revised Code, to include both a statement that the provisions of this chapter apply to the corporation, whether or not it is or continues to be an issuing public corporation, in a transaction that would be a Chapter 1704. transaction for a corporation that is an issuing public corporation, and reasonable sanctions for failure to comply with the provisions of this chapter.
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VII. | 1704.07 OTHER APPLICABLE LAWS. |
(A) The requirements of this chapter are in addition to the requirements of other applicable law, including the provisions of Chapters 1701. and 1707. of the Revised Code.
(B) Except to the extent specifically provided to the contrary by this chapter, nothing in this chapter shall limit or affect the application of any provision of Chapter 1701. or 1707. of the Revised Code thatPlan is not inconsistent with, in conflict with, or contrary to the provisions of this chapter.
(C) Except as otherwise provided in this chapter, nothing in this chapter shall be construed to affect or impair any right, remedy, obligation, duty, power, or authority of any interested shareholder, any issuing public corporation, the directors of any interested shareholder or any issuing public corporation, or any other person under the laws of this or any other state or of the United States.
(D) If any application of any provision of this chapter is for any reason held to bedeemed illegal or invalid, the illegality or invalidity shall not affect any legal and valid provision or applicationthe remaining provisions of this chapter,the Plan, and the parts and applications of this chapterPlan shall be severable.
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Exhibit Dconstrued and enforced as if the illegal or invalid provision had not been included.
(j) OHIO LAW
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I. | 1701.831 CONTROL SHARE ACQUISITIONS PROCEDURES. |
(A) Unless the articles, the regulations adopted by the shareholders, or the regulations adopted by the directors pursuant to division (A)(1)Limitation of section 1701.10Liability. Members of the Revised CodeBoard and the Committee and officers and employees of the issuing public corporation provide that this section does not apply to control share acquisitions of shares of such corporation, any control share acquisition of an issuing public corporationCompany who are their designees acting under the Plan shall be made only withfully protected in relying in good faith upon the prior authorizationadvice of counsel and shall incur no liability except for gross or willful misconduct in the performance of their duties hereunder.
(k) Successors. All obligations of the shareholders of such corporation in accordance with this section.
(B) Any person who proposes to make a control share acquisition shall deliver an acquiring person statement to the issuing public corporation at the issuing public corporation’s principal executive offices. Such acquiring person statement shall set forth all of the following:
(1) The identity of the acquiring person;
(2) A statement that the acquiring person statement is given pursuant to this section;
(3) The number of shares of the issuing public corporation owned, directly or indirectly, by the acquiring person;
(4) The range of voting power, described in division (Z)(l)(a), (b), or (c) of section 1701.01 of the Revised Code, under which the proposed control share acquisition would, if consummated, fall;
(5) A description in reasonable detail of the terms of the proposed control share acquisition;
(6) Representations of the acquiring person, together with a statement in reasonable detail of the facts upon which they are based, that the proposed control share acquisition, if consummated, will not be contrary to law, and that the acquiring person has the financial capacity to make the proposed control share acquisition.
(C)(1) Within ten days after receipt of an acquiring person statement that complies with division (B) of this section, the directors of the issuing public corporation shall call a special meeting of shareholders of the issuing public corporation for the purpose of voting on the proposed control share acquisition. Subject to division (C)(2) of this section, unless the acquiring person and the issuing public corporation agree in writing to another date, such special meeting of shareholders shall be held within fifty days after receipt by the issuing public corporation of the acquiring person statement. If the acquiring person so requests in writing at the time of delivery of the acquiring person statement, such special meetings shall be held no sooner than thirty days after receipt by the issuing public corporation of the acquiring person statement. Subject to division (C)(2) of this section, such special meeting of shareholders shall be held no later than any other special meeting of shareholders that is called, after receipt by the issuing public corporation of the acquiring person statement, in compliance with this section or section 1701.76, 1701.78, 1701.781, 1701.79, 1701.791, 1701.801, or 1701.83 of the Revised Code.
(2) If, in connection with a proposed control share acquisition, the acquiring person changes the percentage of the class of shares being sought, the consideration offered, or the security dealer’s soliciting fee; extends the expiration date of a tender offer for the shares being sought; or otherwise changes the terms of the proposed control share acquisition, then the directors of the issuing public corporation may reschedule the special meeting of shareholders required by division (C)(1) of this section. If the proposed control share acquisition is to be made pursuant to a tender offer, then the meeting may be rescheduled to a date that is not later than the expiration date of the offer. If the proposed control share acquisition is to be made other than pursuant to a tender offer, the meeting may be rescheduled to a date that is not later than ten business days after notice of the change is first given to the shareholders.
(D) Notice of the special meeting of shareholders shall be given as promptly as reasonably practicable by the issuing public corporation to all shareholders of record as of the record date set for such meeting, whether or not entitled to vote at the meeting. The notice shall include or be accompanied by both of the following:
(1) A copy of the acquiring person statement delivered to the issuing public corporation pursuant to this section;
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(2) A statement by the issuing public corporation, authorized by its directors, of its position or recommendation, or that it is taking no position or making no recommendation,Company with respect to Awards granted under the proposed control share acquisition.
(E) The acquiring person may makePlan shall be binding on any successor to the proposed control share acquisition if both of the following occur:
(1) The shareholders of the issuing public corporation who hold sharesCompany, whether as of the record date of such corporation entitling them to vote in the election of directors authorize the acquisition at the special meeting held for that purpose at which a quorum is present by an affirmative voteresult of a majority of the voting power of such corporation in the election of directors represented at the meeting in persondirect or by proxy, and a majority of the portion of the voting power excluding the voting power of interested shares represented at the meeting in personindirect purchase, merger, consolidation, or by proxy. A quorum shall be deemed to be present at the special meeting if at least a majority of the voting power of the issuing public corporation in the election of directors is represented at the meeting in person or by proxy.
(2) The acquisition is consummated, in accordance with the terms so authorized, no later than three hundred sixty days following shareholder authorization of the control share acquisition.
(F) Except as expressly provided in this section, nothing in this section shall be construed to affect or impair any right, remedy, obligation, duty, power, or authority of any acquiring person, any issuing public corporation, the directors of any acquiring person or issuing public corporation, or any other person under the laws of this or any other state or of the United States.
(G) If any application of any provision of this section is for any reason held to be illegal or invalid, the illegality or invalidity shall not affect any legal and valid provision or application of this section and the parts and applications of this section are severable.
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II. | 1701.01 GENERAL CORPORATION LAW DEFINITIONS |
As used in sections 1701.01 to 1701.98 of the Revised Code, unless the context otherwise, requires:
(A) “Corporation”or“domestic corporation”means a corporation for profit formed under the laws of this state.
(B) “Foreign corporation”means a corporation for profit formed under the laws of another state, and “foreign entity” means an entity formed under the laws of another state.
(C) “State”means the United States; any state, territory, insular possession, or other political subdivision of the United States, including the District of Columbia; any foreign country or nation; and any province, territory, or other political subdivision of such foreign country or nation.
(D) “Articles”includes original articles of incorporation, certificates of reorganization, amended articles, and amendments to any of these, and, in the case of a corporation created before September 1, 1851, the special charter and any amendments to it made by special act of the general assembly or pursuant to general law.
(E) “Incorporator”means a person who signed the original articles of incorporation.
(F) “Shareholder”means a person whose name appears on the books of the corporation as the owner of shares of the corporation. Unless the articles, the regulations adopted by the shareholders, the regulations adopted by the directors pursuant to division (A)(1) of section 1701.10 of the Revised Code, or the contract of subscription otherwise provides, “shareholder” includes a subscriber to shares, whether the subscription is received by the incorporators or pursuant to authorization by the directors, and such shares shall be deemed to be outstanding shares.
(G) “Person”includes, without limitation, a natural person, a corporation, whether nonprofit or for profit, a partnership, a limited liability company, an unincorporated society or association, and two or more persons having a joint or common interest.
(H) The location of the “principal office” of a corporation is the place named as the principal office in its articles.
(I) The “express terms” of shares of a class are the statements expressed in the articles with respect to such shares.
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(J) Shares of a class are “junior” to shares of another class when any of their dividend or distribution rights are subordinate to, or dependent or contingent upon, any right of, or dividend on, or distribution to, shares of such other class.
(K) “Treasury shares”means shares belonging to the corporation and not retired that have been either issued and thereafter acquired by the corporation or paid as a dividend or distribution in shares of the corporation on treasury shares of the same class; such shares shall be deemed to be issued, but they shall not be considered as an asset or a liability of the corporation, or as outstanding for dividend or distribution, quorum, voting, or other purposes, except, when authorized by the directors, for dividends or distributions in authorized but unissued shares of the corporation of the same class.
(L) To “retire” a share means to restore it to the status of an authorized but unissued share.
(M) “Redemption price of shares”means the amount required by the articles to be paid on redemption of shares.
(N) “Liquidation price”means the amount or portion of assets required by the articles to be distributed to the holders of shares of any class upon dissolution, liquidation, merger, or consolidation of the corporation, or upon sale of all or substantially all of its assets.
(O) “Insolvent”means that the corporation is unable to pay its obligations as they become due in the usual course of its affairs.
(P) “Parent corporation”or“parent”means a domestic business and/or foreign corporation that owns and holds of record shares of another corporation, domestic or foreign, entitling the holderassets of the sharesCompany.
(l) Code Section 409A Compliance. The Plan is intended to satisfy the requirements of Code Section 409A and any regulations or guidance that may be adopted thereunder, including any transition relief available under applicable guidance. The Plan may be amended or interpreted by the Committee as it determines appropriate in accordance with Code Section 409A and to avoid a plan failure under Code Section 409A(a)(1). If a Participant is a "specified employee" as defined in Code Section 409A at the time to exercise a majority of the voting power inParticipant's separation from service with the electionCompany, then solely to the extent necessary to avoid the imposition of any additional tax under Code Section 409A, the commencement of any payments or benefits under an Award shall be deferred until the date that is six months following the Participant's separation from service (or such other period as required to comply with Code Section 409A).
(m) Additional Restrictions on Awards and Shares. Either at the time an Award is granted or by subsequent action, the Committee may, but need not, impose such restrictions, conditions or limitations as it determines appropriate on the Award, any Common Shares issued under an Award, or both, including, without limitation, (a) restrictions under an insider trading policy, (b) share retention guidelines, minimum holding requirements and other restrictions designed to delay or coordinate the timing and manner of sales, and (c) other policies that may be implemented by the Board from time to time.
13.Effective Date, Amendments, Governing Law and Plan Termination.
(a) Effective Date. The Effective Date of the directorsPlan is the date on which the Company's shareholders approve the Plan at a duly held shareholder meeting.
(b) Amendments.
(i)Amendment of the other corporation without regard to voting power thatPlan. The Committee or the Board may thereafter exist upon a default, failure,at any time terminate or other contingency; “subsidiary corporation” or “subsidiary” means a domestic or foreign corporation of which another corporation, domestic or foreign, isamend the parent.
(Q) “Combination”means a transaction, other than a merger or consolidation, wherein either of the following applies:
(1) Voting shares of a domestic corporation are issued or transferred in considerationPlan in whole or in part, but no such action shall materially and adversely affect any rights or obligations with respect to any Awards granted prior to the date of such termination or amendment without the consent of the affected Participant, except to the extent that the Committee reasonably determines that such termination or amendment is necessary or appropriate to comply with applicable law or the rules and regulations of any stock exchange on which the Common Shares are traded or to preserve any intended favorable, or avoid any unintended unfavorable, tax effects for the transferCompany, Plan or Participants.
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Notwithstanding the foregoing, unless the Company's shareholders shall have first approved the amendment, no amendment of the Plan shall be effective if the amendment would: (A) increase the maximum number of Common Shares that may be delivered under the Plan or to itselfany one individual (except to the extent made pursuant to Section 8 hereof), (B) extend the maximum period during which Awards may be granted under the Plan, (C) add to the types of awards that can be made under the Plan, (D) modify the requirements as to eligibility for participation in the Plan, (E) permit a repricing or decrease the Exercise Price to less than the Fair Market Value on the Date of Grant of any Stock Option or SAR, except for adjustments made pursuant to Section 8, (F) materially increase benefits to Participants, or (G) otherwise require shareholder approval pursuant to the Plan or applicable law or the rules of the principal securities exchange on which Common Shares are traded.
(ii)Amendment of Awards. The Committee may amend, prospectively or retroactively, the terms of an Award, provided that no such amendment is inconsistent with the terms of the Plan or would materially and adversely affect the rights of any Participant without his or her written consent.
(c) Governing Law. To the extent not preempted by Federal law, the Plan and all Award Agreements are construed in accordance with and governed by the laws of the State of Ohio. The Plan is not intended to be governed by the Employment Retirement Income Security Act of 1934, and shall be so construed and administered.
(d) Plan Termination. No Awards shall be made under the Plan after the tenth anniversary of the Effective Date.
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IMPORTANT ANNUAL MEETING INFORMATION |
| | | Electronic Voting Instructions Available 24 hours a day, 7 days a week! Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. Proxies submitted by the Internet or telephone must be received by [1:00 am] Eastern Time on September 15, 2016. Vote by Internet · Go to www.investorvote.com/AGYS · Or scan the QR code with your smartphone · Follow the steps outlined on the secure website |
Using a black ink pen, mark your votes with an X as shown in this example. Please do not write outside the designated areas. | ☒ | | Vote by telephone ·Call toll free 1-800-652-VOTE (8683) within the USA, US territories & Canada on a touch tone telephone · Follow the instructions provided by the recorded message |
Annual Meeting Proxy Card
▼PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
A Proposals — The Board of Directors recommends a vote FOR Proposal 1, FOR all nominees listed in Proposal 2 and FOR Proposals 3, 4 and 5.
If cumulative voting is in effect, the Proxy holders intend to cumulate votes for the election of all or any one or more of its subsidiaries, domestic or foreign,the Board of all or substantially all the assets of one or more corporations, domestic or foreign, with or without good will or the assumption of liabilities;Directors' nominees listed below. THIS PROXY CARD GIVES THE PROXY HOLDERS FULL DISCRETIONARY AUTHORITY TO VOTE CUMULATIVELY AND TO ALLOCATE VOTES AMONG THE NOMINEES LISTED BELOW, UNLESS AUTHORITY TO VOTE FOR ANY OF THEM IS WITHHELD, IN WHICH CASE NO VOTES REPRESENTED BY THIS PROXY CARD WILL BE CAST FOR ANY DIRECTOR FOR WHOM AUTHORITY TO VOTE IS SO WITHHELD.
1. Approval of an amendment to the Company's Amended Code of Regulations to declassify the Board of Directors | For ☐ | Against ☐ | Abstain ☐ |
(2) Voting shares of a foreign parent corporation are issued or transferred in consideration in whole or in part for the transfer of such assets to one or more of its domestic subsidiaries.
“Transferee corporation”in a combination means the corporation, domestic or foreign, to which the assets are transferred, and “transferor corporation” in a combination means the corporation, domestic or foreign, transferring such assets and to which, or to the shareholders of which, the voting shares of the domestic or foreign corporation are issued or transferred.
(R) “Majority share acquisition”means the acquisition of shares of a corporation, domestic or foreign, entitling the holder of the shares to exercise a majority of the voting power in2. If Proposal 1 is approved, the election of directors of such corporation without regard to voting power that may thereafter exist upon a default, failure, or other contingency, by either of the following:
(1) A domestic corporation in consideration in whole or in part, for the issuance or transfer of its voting shares;
(2) A domestic or foreign subsidiary in consideration in whole or in part for the issuance or transfer of voting shares of its domestic parent.
(S) “Acquiring corporation”in a combination means the domestic corporation whose voting shares are issued or transferred by it or its subsidiary or subsidiaries to the transferor corporation or corporations or the shareholders of the transferor corporation or corporations; and “acquiring corporation” in a majority share acquisition means the domestic corporation whose voting shares are issued or transferred by it or its subsidiary in consideration for shares of a domestic or foreign corporation entitling the holder of the shares to exercise a majority of the voting power in the election of directors of such corporation.
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(T) When used in connection with a combination or a majority share acquisition, “voting shares” means shares of a corporation, domestic or foreign, entitling the holder of the shares to vote at the time in the election of directors of such corporation without regard to voting power which may thereafter exist upon a default, failure, or other contingency.
(U) “An emergency”exists when the governor, or any other person lawfully exercising the power and discharging the duties of the office of governor, proclaims that an attack on the United States or any nuclear, atomic, or other disaster has caused an emergency for corporations, and such an emergency shall continue until terminated by proclamation of the governor or any other person lawfully exercising the powers and discharging the duties of the office of governor.
(V) “Constituent corporation”means an existing corporation merging into or into which is being merged one or more other entities in a merger or an existing corporation being consolidated with one or more other entities into a new entity in a consolidation, whether any of the entities is domestic or foreign, and “constituent entity” means any entity merging into or into which is being merged one or more other entities in a merger, or an existing entity being consolidated with one or more other entities into a new entity in a consolidation, whether any of the entities is domestic or foreign.
(W) “Surviving corporation”means the constituent domestic or foreign corporation that is specified as the corporation into which one or more other constituent entities are to be or have been merged, and “surviving entity” means the constituent domestic or foreign entity that is specified as the entity into which one or more other constituent entities are to be or have been merged.
(X) “Close corporation agreement”means an agreement that satisfies the three requirements of division (A) of section 1701.591 of the Revised Code.
(Y) “Issuing public corporation”means a domestic corporation with fifty or more shareholders that has its principal place of business, its principal executive offices, assets having substantial value, or a substantial percentage of its assets within this state, and as to which no valid close corporation agreement exists under division (H) of section 1701.591 of the Revised Code.
(Z) (1) “Control share acquisition”means the acquisition, directly or indirectly, by any person of shares of an issuing public corporation that, when added to all other shares of the issuing public corporation in respect of which the person may exercise or direct the exercise of voting power as provided in this division, would entitle the person, immediately after the acquisition, directly or indirectly, alone or with others, to exercise or direct the exercise of the voting power of the issuing public corporation in the election of directors within any of the following ranges of such voting power:
(a) One-fifth or more but less than one-third of such voting power;
(b) One-third or more but less than a majority of such voting power;
(c) A majority or more of such voting power.
A bank, broker, nominee, trustee, or other person that acquires shares in the ordinary course of business for the benefit of others in good faith and not for the purpose of circumventing section 1701.831 of the Revised Code shall, however, be deemed to have voting power only of shares in respect of which such person would be able, without further instructions from others, to exercise or direct the exercise of votes on a proposed control share acquisition at a meeting of shareholders called under section 1701.831 of the Revised Code.
(2) The acquisition by any person of any shares of an issuing public corporation does not constitute a control share acquisition for the purpose of section 1701.831 of the Revised Code if the acquisition was or is consummated in, results from, or is the consequence of any of the following circumstances:
(a) Prior to November 19, 1982;
(b) Pursuant to a contract existing prior to November 19, 1982;
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(c) By bequest or inheritance, by operation of law upon the death of an individual, or by any other transfer without valuable consideration, including a gift, that is made in good faith and not for the purpose of circumventing section 1701.831 of the Revised Code;
(d) Pursuant to the satisfaction of a pledge or other security interest created in good faith and not for the purpose of circumventing section 1701.831 of the Revised Code;
(e) Pursuant to a merger or consolidation adopted, or a combination or majority share acquisition authorized, by vote of the shareholders of the issuing public corporation in compliance with section 1701.78, 1701.781, 1701.79, 1701.791, or 1701.83 of the Revised Code, or pursuant to a merger adopted in compliance with section 1701.802 of the Revised Code;
(f) The person’s being entitled, immediately thereafter, to exercise or direct the exercise of voting power of the issuing public corporation in the election of directors within the same range theretofore attained by that person either in compliance with the provisions of section 1701.831 of the Revised Code or as a result solely of the issuing public corporation’s purchase of shares issued by it.
The acquisition by any person of shares of an issuing public corporation in a manner described under division (Z)(2) of this section shall be deemed a control share acquisition authorized pursuant to section 1701.831 of the Revised Code within the range of voting power under division (Z)(1)(a), (b), or (c) of this section that such person is entitled to exercise after the acquisition, provided, in the case of an acquisition in a manner described under division (Z)(2)(c) or (d) of this section, the transferor of shares to such person had previously obtained any authorization of shareholders required under section 1701.831 of the Revised Code in connection with the transferor’s acquisition of shares of the issuing public corporation.
(3) The acquisition of shares of an issuing public corporation in good faith and not for the purpose of circumventing section 1701.831 of the Revised Code from any person whose control share acquisition previously had been authorized by shareholders in compliance with section 1701.831 of the Revised Code, or from any person whose previous acquisition of shares of an issuing public corporation would have constituted a control share acquisition but for division (Z)(2) or (3) of this section, does not constitute a control share acquisition for the purpose of section 1701.831 of the Revised Code unless such acquisition entitles the person making the acquisition, directly or indirectly, alone or with others, to exercise or direct the exercise of voting power of the corporation in the election of directors in excess of the range of voting power authorized pursuant to section 1701.831 of the Revised Code, or deemed to be so authorized under division (Z)(2) of this section.
(AA) “Acquiring person”means any person who has delivered an acquiring person statement to an issuing public corporation pursuant to section 1701.831 of the Revised Code.
(BB) “Acquiring person statement”means a written statement that complies with division (B) of section 1701.831 of the Revised Code.
(CC) (1) “Interested shares”means the shares of an issuing public corporation in respect of which any of the following persons may exercise or direct the exercise of the voting power of the corporation in the election of directors:
(a) An acquiring person;
(b) Any officer of the issuing public corporation elected or appointed by the directors of the issuing public corporation;
(c) Any employee of the issuing public corporation who is also a director of such corporation;
(d) Any person that acquires such shares for valuable consideration during the period beginning with the date of the first public disclosure of a proposal for, or expression of interest in, a control share acquisition of the issuing public corporation; a transaction pursuant to section 1701.76, 1701.78, 1701.781, 1701.79, 1701.791, 1701.83, or 1701.86 of the Revised Code that involves the issuing public corporation or its assets; or any action that would directly or indirectly result in a change in control of the issuing public corporation or its assets, and ending on the record date
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established by the directors pursuant to section 1701.45 and division (D) of section 1701.831 of the Revised Code, if either of the following applies:
(i) The aggregate consideration paid or given by the person who acquired the shares, and any other persons acting in concert with the person, for all such shares exceeds two hundred fifty thousand dollars;
(ii) The number of shares acquired by the person who acquired the shares, and any other persons acting in concert with the person, exceeds one-half of one per cent of the outstanding shares of the corporation entitled to vote in the election of directors.
(e) Any person that transfers such shares for valuable consideration after the record date described in division (CC)(l)(d) of this section as to shares so transferred, if accompanied by the voting power in the form of a blank proxy, an agreement to vote as instructed by the transferee, or otherwise.
(2) If any part of this division is held to be illegal or invalid in application, the illegality or invalidity does not affect any legal and valid application thereof or any other provision or application of this division or section 1701.831 of the Revised Code that can be given effect without the invalid or illegal provision, and the parts and applications of this division are severable.
(DD) “Certificated security”and“uncertificated security”have the same meanings as in section 1308.01 of the Revised Code.
(EE) “Entity”means any of the following:
(1) A for profit corporation existing under the laws of this state or any other state;
(2) Any of the following organizations existing under the laws of this state, the United States, or any other state:
(a) A business trust or association;
(b) A real estate investment trust;
(c) A common law trust;
(d) An unincorporated business or for profit organization, including a general or limited partnership;
(e) A limited liability company;
(f) A nonprofit corporation.
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PRELIMINARY COPY, SUBJECT TO COMPLETION, DATED NOVEMBER 24, 2009
[FORM OF PROXY — FRONT— WHITE]
AGILYSYS, INC.
SPECIAL MEETING OF SHAREHOLDERS – JANUARY 5, 2010
UNDER SECTION 1701.831 OF THE OHIO REVISED CODE
This Proxy is Solicited on Behalfseven members of the Board of Directors to hold office for a one-year term expiring at the 2017 Annual Meeting.
01 – Donald A. Colvin 02 – James H. Dennedy 03 – Jerry Jones 04 – Michael A. Kaufman 05 – Melvin L. Keating 06 – Keith M. Kolerus 07 – John Mutch
☐Mark here to WITHHOLD vote from all nominees. | | | | |
☐Mark here to vote FOR all nominees. | | | | |
☐For All Nominees EXCEPT – To withhold a vote for one or more nominees, mark the box to the left and the numbered box(es) to the right corresponding to the director(s) listed above. | 01 ☐ | 02 ☐ | 03 ☐ | 04 ☐ | 05 ☐ | 06 ☐ | 07 ☐ |
If Proposal 1 is not approved, the election of four Class B members of the Board of Directors to hold office for a two-year term expiring at the 2018 Annual Meeting.
01 –James H. Dennedy 02 – Jerry Jones 03 – Michael A. Kaufman 04 – John Mutch
| ☐Mark here to WITHHOLD vote from all nominees. | | | | |
| ☐Mark here to vote FOR all nominees. | | | | |
| ☐For All Nominees EXCEPT – To withhold a vote for one or more nominees, mark the box to the left and the numbered box(es) to the right corresponding to the director(s) listed above. | 01 ☐ | 02 ☐ | 03 ☐ | 04 ☐ |
3. Approval of the Agilysys, Inc. 2016 Stock Incentive Plan. | For ☐ | Against ☐ | Abstain ☐ | |
4. Approval, on a non-binding advisory basis, the compensation of our named executive officers set forth in the attached Proxy Statement. | ☐ | ☐ | ☐ | |
5. Ratification of the appointment of Grant Thornton LLP as our independent registered public accounting firm for the fiscal year ending March 31, 2017. | ☐ | ☐ | ☐ | |
6. In their discretion, the proxies are authorized to vote upon such other business as may properly come before the Annual Meeting or any adjournments thereof.
B Non-Voting Items
Change of Address – Please print new address below.
C Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below
Please sign exactly as your name appears above. If signing as attorney, executor, administrator, trustee or guardian, please give full title as such; and if signing for a corporation, please give your title. When shares are in the names of more than one person, each must sign.
Date (mm/dd/yyyy) — Please print date below. Signature 1 — Please keep signature within the box. Signature 2 — Please keep signature within the box.
▼ PLEASE FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. ▼
Proxy Card — Agilysys, Inc. — Annual Meeting of Shareholders — September 15, 2016
This proxy is solicited on behalf of the Board of Directors
The undersigned hereby appoints Martin F. EllisJames H. Dennedy, Keith M. Kolerus and Lawrence N. Schultz,Kyle C. Badger, and each of them, as Proxyproxy holders and attorneys, with full power of substitution, to appear and vote all of the Common Shares of Agilysys, Inc. which the undersigned shall be entitled to vote at the SpecialAnnual Meeting of Shareholders of Agilysys, to be held on Wednesday, September 15, 2016 at the Agilysys headquartersAgilysys' offices at 28925 Fountain Parkway, Solon, Ohio 44139,3380 146th Place SE, Suite 400, Bellevue, Washington 98007 at 8:30[8:00 a.m.], local time, and at any adjournments thereof, hereby revoking any and all proxies heretofore given.
The undersigned hereby authorizes and directs said Proxy holders to vote all of the Common Shares represented byWhen properly executed, this Proxy as follows,with the understanding that if no directions are given below for any proposal, said Common Sharesproxy will be voted ABSTAIN onin the manner directed by the signed shareholder(s); if no direction is made, this proxy will be voted FOR proposal 1, FOR all nominees in proposal 2 and FOR proposal 2.proposals 3, 4 and 5.
The Board of Directors of Agilysys has determined to express no opinion and remain neutral with respect to proposal 1.PLEASE COMPLETE, DATE AND SIGN THIS PROXY CARD AND RETURN IT IN THE ENCLOSED POSTAGE-PAID ENVELOPE.
The Board of Directors of Agilysys unanimously recommends that shareholders vote FOR proposal 2.
1. | | To approve a proposal to authorize, pursuant to Section 1701.831 of the Ohio Revised Code, the acquisition (the “Control Share Acquisition”) of Agilysys Common Shares by MAK Capital pursuant to the Acquiring Person Statement. |
2. | | To approve any motion for adjournment of the Special Meeting, if deemed desirable by Agilysys in its sole discretion. |
In their discretion, the Proxy holders are authorized to vote upon such other business as may properly come before the meeting.
Signatures(s):Date:
Note: Please sign your name exactly as it appears above. Joint owners should each sign. When signing as attorney, executor, administrator, trustee or guardian, please give your full title as such. If signing on behalf of a corporation, please sign in full corporate name by the president or other authorized officers(s). If signing on behalf of a partnership, please sign in full partnership name by authorized person(s).
Important Notice Regarding Internet Availability of Proxy Materials for the SpecialAnnual Meeting to be held on January 5, 2010:
September 15, 2016: The Notice of SpecialAnnual Meeting of Shareholders and Proxy Statement are available on our website at www.agilysys.com.www.agilysys.com.
Please be sure to read the certification included on the reverse side of this WHITE proxy card(Continued and to mark the appropriate box indicating whether you are a holder of “Interested Shares.”
Householding
We are requesting your voluntary participation in our program to mail only one copy of various corporate communications, such as annual reports and proxy statements, to your household. This “householding” process has been approved by the Securities and Exchange Commission. Participation in householding involves no cost to you and your consent will cover mailings beginning in 2010 and will remain in effect until you revoke it. Your consent may be revoked at any time by notifying Agilysys, Inc. in writing at the following address: Corporate Secretary, Agilysys, Inc., 28925 Fountain Parkway, Solon OH 44139. If you have any questions about the householding program, please call Agilysys Investor Relations at 440.519.8635.
If you consent to receiving only one annual report and proxy statement for your household, put a check mark in the box below.
o | | I consent to receiving one copy of various corporate communications, such as annual reports and proxy statements for my household. |
(Continuedsigned on reverse side)
[FORM OF PROXY — REVERSE]
CERTIFICATION AS TO ELIGIBILITY TO VOTE
As described in the Proxy Statement, the Ohio Control Share Acquisition Statute requires that the Control Share Acquisition be authorized by a vote of the majority of Common Shares of Agilysys, Inc. (“Agilysys”) entitled to vote in the election of directors represented at the Special Meeting in person or by proxy, excluding any “Interested Shares.” Any terms used but not defined herein shall have the meaning assigned to them in the Proxy Statement. For purposes of the Ohio Control Share Acquisition Statute, “Interested Shares” means Common Shares in respect of which any of the following persons may exercise or direct the exercise of the voting power:
| 1. | | MAK Capital Fund LP and Paloma International L.P. or any of their affiliates; |
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| 2. | | Any officer of Agilysys elected or appointed by the directors of Agilysys; |
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| 3. | | Any employee of Agilysys who is also a director of Agilysys; |
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| 4. | | Any person that acquires Common Shares for valuable consideration during the period beginning on November 20, 2009 and ending on November 24, 2009 (the “Record Date”) if the aggregate consideration paid or given by the person who acquired the Common Shares, and any other persons acting in concert with the person, for all those Common Shares exceeds $250,000; or |
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| 5. | | Any person that transfers such Common Shares for valuable consideration after the Record Date as to Common Shares so transferred, if accompanied by the voting power in the form of a blank proxy, an agreement to vote as instructed by the transferee, or otherwise. |
As of the date upon which the undersigned executes this proxy card, the undersigned hereby certifies that the Common Shares being voted pursuant to this proxy card are:
(Please mark only one Box)
o Not “Interested Shares” as defined in the Ohio Control Share Acquisition Statute.
OR
o “Interested Shares” as defined in the Ohio Control Share Acquisition Statute.
If you own “Interested Shares” because you acquired more than $250,000 of Common Shares between November 20, 2009 and the Record Date, please indicate in the following space the number of shares you acquired prior to November 20, 2009, which you continued to own as of the Record Date and therefore will be entitled to vote in connection with the Second Majority Approval on the Control Share Acquisition proposal at the Special Meeting.
Number of Common Shares acquired prior to November 20, 2009, which continue to be owned as of the Record Date: November 24, 2009:
If you checked the “Interested Shares” box but did not indicate how many eligible Common Shares you own that were purchased prior to November 20, 2009, all of your Common Shares will be considered “Interested Shares” and therefore will not be eligible to vote in connection with the Second Majority Approval on the Control Share Acquisition proposal at the Special Meeting.
If (i) no box is checked indicating whether Common Shares represented by this proxy card are “Interested Shares” or (ii) both of the above-boxes are checked, the Common Shares represented by this proxy will be deemed to be “Interested Shares” and therefore ineligible to vote in connection with the Control Share Acquisition proposal, as described in the Proxy Statement.
By signing on the reverse side, you (a) instruct that the Common Shares represented by this proxy card be voted as marked on the front side; (b) certify whether or not your Common Shares are “Interested Shares” as defined in the Ohio Control Share Acquisition Statute; and (c) undertake to notify Agilysys if at any time after the Record Date you transfer Common Shares entitled to vote in the election of directors, for valuable consideration, accompanied by the voting power in the form of a blank proxy, an agreement to vote as instructed by the transferee, or otherwise.
(Continued on reverse side)
SPECIAL MEETING VOTING INSTRUCTIONS IN CONNECTION WITH
PROVISIONS OF THE OHIO CONTROL SHARE ACQUISITION STATUTE
AGILYSYS, INC.
Voting Procedures — Beneficial Owners
To All Banks, Brokers and Nominees:
Enclosed is the Proxy Statement of Agilysys, Inc. (“Agilysys”) dated December 7, 2009, (the “Proxy Statement”) for the special meeting of shareholders to be held on January 5, 2010 (the “Special Meeting”). Agilysys shareholders:
(i) who were holders of record as of November 24, 2009 (the “Record Date”) of Agilysys Common Shares, without par value, AND
(ii) who certify as to the eligibility of such Common Shares under the criteria set forth on the back of the form of proxy attached to the Proxy Statement, will be entitled to have their Common Shares voted in determining whether the acquisition of Common Shares pursuant to the acquiring person statement of MAK Capital Fund LP, a Bermuda limited partnership, and Paloma International L.P., a Delaware limited partnership, (“MAK Capital”) dated November 20, 2009 (the “Control Share Acquisition”), has been authorized by the Second Majority Approval (as defined in the Proxy Statement) as required by Section 1701.831 of the Ohio Revised Code (the “Ohio Control Share Acquisition Statute”). All holders of Common Shares as of the Record Date will be entitled to have their Common Shares voted in determining whether the Control Share Acquisition has been authorized by the First Majority Approval (as defined in the Proxy Statement) as required by the Ohio Control Share Acquisition Statute.
To enable Agilysys to tabulate the voting by beneficial owners of Common Shares held in your name, a special WHITE proxy card (which includes a related certification of eligibility) has been prepared for use in tabulating the number of Common Shares that are eligible to be voted in determining whether the Control Share Acquisition has received the Second Majority Approval. On this card, the beneficial owner must certify whether or not such person’s Common Shares are Interested Shares. If some but not all of its Common Shares owned are Interested Shares, the beneficial owner must certify the number of Common Shares that are not Interested Shares. If the beneficial owner does not make a certification, or fails to specify the number of such owner’s Common Shares that are not Interested Shares, all of such beneficial owner’s Common Shares shall be deemed to be Interested Shares. Such beneficial owner must by the same signature give instructions as to the voting of the Common Shares it beneficially owns.
In the case of shareholders who both (i) beneficially own Common Shares that are Interested Shares because they were acquired during the period commencing on November 20, 2009, the date of the first public disclosure of MAK Capital’s Acquiring Person Statement, and ending on the Record Date for the Special Meeting (the “Restricted Period”) for an aggregate consideration in excess of $250,000 and (ii) own Common Shares that are not “Interested Shares” because they were acquired prior to the Restricted Period and otherwise do not meet the definition of Interested Shares, such Common Shares that are not Interested Shares will be counted and voted in determining whether the Second Majority Approval has been obtained only if an appropriate certification of eligibility with respect to such Common Shares, as described above, is provided.
If you are a bank, broker or other nominee who holds Common Shares for a beneficial owner of Common Shares, you should look through to the person who has the power “to exercise or direct the exercise of the vote” with respect to Common Shares at the Special Meeting in determining whether such Common Shares acquired during the Restricted Period are Interested Shares.
Under Ohio law, all Common Shares, including the first $250,000 worth of such Common Shares, acquired during the Restricted Period for an aggregate purchase price of more than $250,000 will be considered Interested Shares.
Furthermore, Common Shares that are considered Interested Shares because they were purchased during the Restricted Period as part of an aggregate purchase of $250,000 or more of Common Shares will remain Interested Shares if owned by such purchaser as of the Record Date even if the purchaser of such Common Shares at some point during that period disposes of some of such Common Shares. For example, in the case of a person who buys $1,000,000 worth of Common Shares during the Restricted Period, then sells $800,000 worth of Common Shares during that period, all of such person’s Common Shares acquired during that period and still
owned as of the Record Date are Interested Shares.
The Ohio Control Share Acquisition Statute requires that Common Shares acquired by persons acting in concert be aggregated for the purpose of calculating the $250,000 threshold for determination of Interested Share status. In the event that Common Shares are entitled to be voted by more than one person, or two or more persons share voting power, all of such Common Shares will be considered to be owned by each such person for purposes of determining whether such Common Shares are Interested Shares.
If you are a broker or bank, do not certify the eligibility of Common Shares without receiving the Certification from your client or customer.Only the beneficial owner can certify the Common Shares are Interested Shares as represented by the Proxy Card.
[December 7], 2009
